STRATEGIES FOR BUSINESS IN

Too much water drowned the miller

A PROPOS

When it comes to roads, the words of the great Russian In Soviet times, no one really had the need for good classic Nikolai Gogol come to mind: “ has two roads either. A car was a luxury item for the majority of woes: fools and roads.” Well, as far as fools go, they citizens. It only became an ordinary mode of transpor- are a dime a dozen everywhere, but when it comes to tation in the last 10-15 years. In other words, Russia roads, there is a real problem in our homeland. To put it only recently got behind the wheel. No wonder there is mildly, we have none. Napoleon once remarked: “There no developed culture of driving and road etiquette. are no roads in Russia, only directions.” The French In terms of the number of cars, the leading city in Rus- Emperor knew what he was talking about. It was the sia is, of course, Moscow. The capital, with a population absence of roads in Russia, after all, that contributed to of 12 million people, boasts about 5 million officially his defeat to a certain extent. Napoleon’s transport was registered vehicles. “Cars, cars,” — sings Valeri Leon- designed for paved roads. The French carts broke down tyev, “are everywhere/ Over century old dust/Car tracks quickly on mud and sand, causing frustration and panic have passed.” The number of cars in the capital grows among the troops. by 8-9% every year.

Russians themselves have long since become accus- That’s way more than just a few. We clearly need good tomed to a lack of roads. By and large, it seems like roads to accommodate all of these cars. But it’s not they never felt the need for good roads. In any case, for just roads we need. In order to avoid a transportation centuries Russians lived in insular communities. Many collapse, the city's government has put together a plan never left their home villages. Where was there to go, of initiatives to be implemented before 2020. These anyway? At the beginning of the 20th century, there initiatives will radically improve the transportation net- were only 700 cities in Russia. work in Moscow. The plan involves building new roads, reconstructing interchanges, fixing up various structures The emergence of automobiles that propelled road de- of the street and road network, building approximately velopment in the US and Europe sidestepped Russia as 80 metro stations and reconstructing 9 railway termi- well. Automobiles were always in short supply in Rus- nals and 32 stations. The Government has allocated a sia. In 19 14 – one hundred years ago – the were only total of 2.9 trillion rubles for the project. 14,000 cars in Russia. They could primarily be found in St. Petersburg, where pedestrians shied away from At that rate, Nikolai Gogol’s commonly quoted saying them in terror. During this same time period, there were will soon cease to be relevant — it will simply become a a over a million cars on the roads in the United States. thing of the past.

Sergo Kukhianidze

Editor in Chief CAPITAL IDEAS Founder: Department for External Economic and International Relations of the Government of Moscow Address: , 13, Moscow, 125032. Ph: +7 (495) 633-68-66 Fax: +7 (495) 633-68-65 E-mail: [email protected] Moscow official www.dvms.mos.ru Editorial staff: News Editor-in-chief – Sergo Kukhianidze Production crew of the edition: Elena Egorova (deputy editor-in-chief), Sergei Sobyanin, the met with the of Tokyo Evgeny Khokhlov, Dmitry Sokolov, Marina Ogorodnikova, Alexander Pigarev, Anna Tomkins, Marina Yurshina, Tatyana Akimova, Ivan Skorikov, Moscow days in Vienna Anastassia Paloni, Sergei Levin 6–9 CAPITAL IDEAS STRATEGIES FOR BUSINESS IN MOSCOW

Publisher: Moscow Center for International Cooperation 10–15 CEO: Igor Tkach Address: 105005, 68/8, build.1, Baumanskaya str., Moscow, Russia Face to Face Phone: +7 (499) 267-46-56 E-mail: [email protected] Transportation development General Partner: National Review Ltd in Moscow is our priority CEO – Sergei Oposhnyanskiy Is Moscow at a risk of a transportation collapse? Is the Phone.: +7 (495) 784-69-71 fame and glory of the on its way to E-mail: [email protected] becoming a thing of the past? , Consulting – Sergei Anikanov, Evgeny Khokhlov the Deputy Mayor at the Government of Moscow for Design – Robert Saifulin Urban Development and Construction, answers these Photo editor – Victoriya Oposhnyanskaya questions and addresses other issues in his exclusive Page layout – Alexander Saifulin interview with Capital Ideas. Assistant – Nadezhda Ratanova 16–17 Distribution – "Trans-Media" Ltd Acknowledgements to: City’s graph PHOTO ITAR TASS Agency, RIA-Novosti, All Over Press Agency, mos.ru, companies and organizations, represented in the issue. Planned budget for the If you wish to get new issues of Capital Ideas, please, apply to: [email protected] development of new The magazine is registered with at the Federal Authority of Legislative Control in Mass Media and Cultural Heritage Protection. Media registration certificate ФС77-53716, issued April 26, 2013. transportation infrastructure All reproduction permitted only with the Editor’s permission and reference to ‘Capital Ideas’. between 2012 – 2020 Distributed free of charge Published with support from the Department for External Economic and International Relations of the Government of Moscow

Circulation : 7000 Signed into print 29.09.2014 16+ Interview Nothing Ventured Nothing Ventured Our goal is to create a A leader in Russia must city that is comfortable My heart has two countries and two homes: be strong! and easy to get around Peter Vullinghs, CEO of Philips in Russia Deputy head of the State Public Moscow and Berlin and CIS countries, shared with readers of Institution “Center of traffic organization Jörg Schreiber was born in Berlin but knows Capital Ideas his observations about the of the Government of Moscow” and Head Russia as well as his native country. He is changes in the country which he has seen in of the CODD Situation Center Alexander undoubtedly one of the most famous and recent years, his secrets of business success, Evsin talks about the development of road influential people in the Russian automotive declared his affection for Russian people and safety and traffic engineering business. explained why he loves living in Moscow. 18–20 34–38 46–49

22–23 40–45 Moscow in words Nothing Ventured

24–29 Management of Hitachi Moscow Global supports business Our relationship is the at development in Russia According to one of the famous Russian its best point in history proverbs, "Moscow was not built in a day." The incumbent Chinese Ambassador to Russia Li But it is more accurate to say, "Moscow Hui answered Capital Ideas’ questions. never stops building." In every part of the city today, you can stumble on a fenced site of a 30–32 new building or renovation. And often, bright orange excavators with the brand name Interview HITACHI inscribed on them can be found on I'm always on the side these sites. of business In the Russian capital, a new institution has emerged: the Institute of the Commissioner for the Protection of the rights of entrepreneurs. What does it do? This is a Capital Ideas interview with the Head of the Institute, Mikhail Vyshegorodtsev.

October-December 2014 CAPITAL IDEAS 3 Nothing Ventured

Moscow: the specifics Travel Nothing Ventured of the vending Unique garden in Fun to Live – Fun to machine market During the Soviet years, stopping by for the center of Moscow Drive a glass of mineral water from a vending There are different types of gardens: flower gardens Yoshiaki Ichimura is the head of Subaru machine was a pleasant treat for people and vegetable gardens. In Moscow, not far from Motors LLC. He started working as CEO of taking walks in the center of Moscow. Prospect Mira , there is an unusual the company in August 2013. Ichimura-san Today, these vending machines are once garden that is markedly different from typical gardens. talked about his life and work in the Russian again appearing on the city's streets, and It was founded in 1706 and its first director was the capital in an interview with Capital Ideas. they sell a lot more than just water. famous German medical doctor Traugott Gerber. 50-54 58–60 66-69

56–57 62–65 72–74 Nothing Ventured Nothing Ventured Bookshelf Full Tank of Electricity We only make Making perfect The bright colorful future described by shoes with fur Teri Lindeberg, founder and CEO of twentieth-century Russian science fiction Staffwell, is a remarkable woman. She has not materialized. However, one part for Russia! knows all the ins and outs of doing of it—electric cars, can already be seen The Swedish shoe company business in Russia. She is the author zipping through the streets of Moscow. Vagabond, which produces stylish of a great book called Making Perfect, and original footwear, has entered the which is about what employees want Russian market with a bang. Andreas from their employers. Here is an excerpt from the book. Oden, CEO of Vagabond, spoke with Capital Ideas magazine about his strategy to develop the brand in Russia and what differentiates Russian and European consumers.

4 CAPITAL IDEAS October-December 2014 Life&Culture Knowledge is power Fall in Moscow: Education in English party for everybody There are several schools throughout In Moscow, fall is the “hottest” season. Moscow that provide the highest The weather cools down, it is cloudy international level of education with and damp outside, yellow leaves dance courses taught in English. Many their last autumn waltz in the air, slowly expatriate children, whose parents settling in rain puddles. But cultural life are employees of foreign companies in flourishes in the fall. Tickets to exhibitions, Moscow for work, study in them. Here’s theatres, cinemas and concert halls are a list of these schools. Moscow Vocabulary always sold out. 75–77 80–81 86–91

78-79 82–85 92–96 Quality Time Roots Food&Drink In Shakespeare's Admiral In Russia, people Language Robert Crown: really love Practically every bookstore has a shelf Serving Russia! a celebration! for books in English. It usually consists of textbooks and dictionaries for those He was born in 1753 in Scotland under Christian Lorenzini was never studying the language. However, Moscow the name of Robert. But he earned planning to live and work in Russia, has several bookstores specializing in his glory in Russia, becoming Roman but a Russian oligarch made him an foreign literature, where even the most Vasilyevich Crown here. offer he could not refuse. Many years censorious readers from abroad can feel have passed, there were difficulties at home. and obstacles as well as multiple job changes. Recently, Lorenzini opened his own auteur restaurant Christian and now advises everyone to come to Moscow with an open heart and mind.

October-December 2014 CAPITAL IDEAS 5 MOSCOW OFFICIAL The Mayor of Moscow met with

The meeting between and the Gov- the Governor of Tokyo ernor of Tokyo Yoichi Masuzoe took place at VDNKh during the Moscow City Day celebration.

“I hope you have a great time. We are going to hold talks regarding the issue of cooperation between Moscow and Tokyo. We are going to show you VDNKh, the Exhibition of National Economy Achieve- ments. I hope that your entrepreneurs will take part in it,” Sergey Sobyanin said.

Yoichi Masuzoe, in turn, talked about the friendly relations between the capitals of Japan and Russia. “Moscow and Tokyo are sister cities. All of the world's large cities, including Moscow and Tokyo, encounter similar kinds of problems. I think that our meeting today will be and important milestone in the further strengthening of ties between the residents of Tokyo and Moscow,” he added.

Sergey Sobyanin invited his Japanese colleagues to visit Moscow again in order to discuss issues of co- operation. Moreover, he stated that the Moscow del- egation is planning a visit to Tokyo as well.

“In October, representatives from the Moscow Gov- ernment and entrepreneurs will be visiting Japan. They will address issues such as transportation de- velopment, medicine and the environment. I hope that we have your support,” the Mayor of Moscow declared. ■ On September 8-10, the capital of Austria hosted an event called Mos- cow Days. The parties agreed on further development plans for mutually beneficial cooperation between the capitals of Russia and Austria in the spheres of economic development, energy, health care, housing and com- munity services, culture and sports. Moscow Days in Vienna Head of the External Economic and International Rela- The meeting entailed an open exchange of perspectives tions Department (DVMS) Sergey Cheremin headed the on bilateral cooperation between the capitals of Russia Russian capital's delegation in Vienna. The delegation and Austria. Both parties expressed satisfaction with the included the Minister and Head of the Moscow Depart- development of the partnership and the progress that ment of Culture Sergei Kapkov, Minister and Head of the has been made in terms of implementing the protocol Department of Cultural Heritage of the City of Moscow of cooperation signed last year during Days of Vienna Alexander Kibovsky, President of the Moscow Chamber in Moscow. of Commerce Mikhail Kuzovlev, Moscow government representatives and other officials. "For us, Austria is a strategic partner. I hope that the Austrian enterprises will continue to be reliable partners The Mayor of Vienna Michael Häupl met with the offi- in the modernization of our city," Sergey Cheremin said, cial Moscow government delegation in Vienna City Hall. “A lot of Austrian companies have expressed interest

The meeting between the Mayor of Vienna Michael Haupl and the Official Delegation of the Moscow Government, Vienna City Hall, September 8

October-December 2014 CAPITAL IDEAS 7 MOSCOW in our Greater Moscow construction project. This is an Theater, accompanied by the Vienna Symphony Or- OFFICIAL ambitious project initiated by the Moscow government, chestra, performed great works of art by composers which involves the construction of an entirely new city. such as Mikhail Glinka, Pyotr Tchaikovsky, Wolfgang We will try to learn from your experience in constructing Amadeus Mozart and Johann Strauss. a transportation system, developing a public transpor- tation network and implementing a health care system." On September 9, the Economic Chamber of Vienna hosted an economic forum called "Synergy - new op- The Mayor of Vienna noted that the relationship be- portunities for growth" as part of the Moscow Days tween the two cities remained unaffected by today's event program. It was attended by the Vice-Mayor of complicated political situation. He stressed that the Vienna Renate Brauner. visit of the Mayor of Moscow Sergey Sobyanin, which has been delayed, can take place at any time that is The President of the Economic Chamber of Vienna convenient for Sobyanin. Walter Ruck delivered a welcome address in front of the participants. "Russia and Moscow have been im- "I am very pleased that there has been an opportunity to portant and reliable partners for many years. We wel- host the Days of Moscow in Vienna in response to the come the presence of Russian investors in Austria and Vienna Days in Moscow in spite of the challenging po- Vienna, and our investors are welcome in Russia," he litical situation. In times like this, this is a sign that coop- said. Ruck stated that, according to Economic Cham- eration between our two cities functions independently ber of Vienna, the volume of Austrian investments in of political tensions in the world,” the Mayor of Vienna Russia amounts to 7 billion euros and Russian invest- said, "We are very interested in the Moscow expansion ments in Austria, which are mostly confined to Vien- project and are delighted with how seriously you are ap- na, amount to 6.5 billion euros. proaching its implementation.” Today, the political environment in Europe threatens On the same day, the Michaelerplatz hosted the open- to destabilize Moscow-Vienna relations. “We have to ing of a joint project between the Gorky Central Park of be ready to tackle this challenge. Our cities have a long Culture and Leisure and the Vienna Tourist Board. The history of friendly relations. We hope that our bilateral "Mobile Park" was represented by the Head of the Exter- cooperation will develop further in the future and that nal Economic and International Relations Department the Economic Chamber of Vienna will be a part of this Sergey Cheremin and head of the Department of Culture development,” Ruck said. Sergei Kapkov. On the Austrian side, the event was at- tended by the head of the Department of Culture of the "We appreciate the fact that you have come to the Vienna Magistrate Ernst Waller. On the same day, head economic forum during Moscow Days in Vienna," of the Moscow delegation Sergei Cheremin and other said Vice-President of the Moscow Chamber of Com- officials visited the Central Railway Station in Vienna. merce Suren Vardanyan during his address to the participants. "It is evident that partnerships between The first Day of Moscow ended with a gala concert in our business communities are not subject to political the Vienna City Hall. Soloists from the State Bolshoi pressure and volatility," he said.

Placing wreaths at the memorial erected in honor of Soviet soldiers who perished during the liberation of Vienna. The Russian Ambassador to Austria Sergey Nechayev The authorities of the Russian capital are working stressed that the recent visit of Russian President Vlad- to create an environment that is conducive to busi- imir Putin to Vienna, which was intended to acknowl- ness development, including foreign business devel- edge the significant contribution of Austrian compa- opment, in Moscow. For example, foreign companies nies to the Winter Olympics in Sochi, gave impetus for can take part in competitions on the distribution of further development of Russia-Austria relations. city construction orders. "We believe that this is a very attractive market for Austrian companies," Cheremin "We are pleased that Moscow Days is taking place said. "Moscow's GRP is about 300 billion euros. This in spite of the political turbulence in the world. The amount is expected to reach 400 billion euros by business sectors in Moscow and Vienna are always 2025,” said the head of the DVMS. He said that per supporting each other. We will continue to work to- capita GRP in Moscow is currently 22 thousand euros. gether. Moscow and Vienna are setting the tone for regional cooperation,” the ambassador said. As Cheremin noted, the volume of investment in fixed capital in Moscow is growing steadily. Notably, over The head of the official delegation of the Moscow 70% of investments come from non-budget sources. Government and Head of the External Economic and "More and more investments are flowing in from the International Relations Department (DVMS) Sergey European Union, as well as from countries such as Ja- Cheremin gave a presentation on the Russian capi- pan, China and Latin America," said the head of the tal at the forum. "Since 2012, Austria has been in 20th Moscow delegation. place on the list of our foreign partners in terms of trade volumes. Trade volumes between Moscow and As part of the Economic Forum, the Moscow delega- Austria amount to about 2 billion euros a year,” the tion visited a number of Austrian facilities, including Minister said. Austrian enterprises are active on the the AspernIQ technology center, which produces more Russian market. In turn, many Russian companies energy than it consumes, and the MUT manufacturing hold shares of Austrian companies. "Today, there are plant, which designs, manufactures and puts into op- more than 100 large enterprises with Austrian capital eration refuse collection and street-cleaning vehicles, in Moscow with total registered capital of more than sewage treatment plants, materials-handling equip- 200 million euros," he noted. ment and environmental protection technology. ■

Economic forum "Synergy – new opportunities for growth." September 9, Economic Chamber of Vienna

October-December 2014 CAPITAL IDEAS 9 FACE TO FACE Marat Khusnullin: Transportation development in Moscow is our priority

Is Moscow at a risk of transportation Mr. Khusnullin, the problem of transportation in Moscow is one of the most important challenges. Is collapse? Is the fame and glory of Moscow any different from other large city when it the Moscow metro on its way to comes to transportation issues? Or do we face the same challenges as everyone else? becoming a thing of the past? Marat It's true that the issue of transportation is the most KHUSNULLIN, the Deputy Mayor at important challenge Moscow faces today. But there is the Government of Moscow for Urban nothing unique about this. The problems that need to be solved are more or less the same for all major cities Development and Construction, in the world and one of the most important problems is the issue of transportation. I have visited a lot of ma- answers these questions and jor cities and always send our experts to other cities as addresses other issues in his exclusive well so they can study how our colleagues are tackling this challenge. We focus on megapolises, since Moscow interview with Capital Ideas. cannot be compared to small European and American towns. It only makes sense to compare ourselves to cit- ies that are comparable in size. In this regard, I'll mention the ratings of the world's 30 largest megapolises from PricewaterhouseCoopers, one of the largest audit firms in the world. In 2013, Moscow placed ahead of Beijing, Shanghai and New York in terms of the number of fa- cilities simultaneously under construction. According to these ratings, we are 9th in the world.

Beijing, Shanghai and New York are precisely the types of cities that we can compare ourselves to. Shanghai has a population of 24 million people. The total length of the road network there is around 10,000 km and the total number of vehicles is around 4 million. In Beijing, there are 3.5 million vehicles and over 42,000 km of roads with a total population of about 21 million people. In Moscow, we have 3,700 km of roads. The total population in the city is 12 mil- lion, but if we take into consideration the regions located within 50km of Moscow, the population is closer to 22 million (the official number is 19 million,

10 CAPITAL IDEAS October-December 2014

FACE TO FACE

but data collected by mobile operators indicate that Of course, routes with traffic lights, with not enough the figure is much higher). lanes and a lack of modern road junctions slow down traffic and cause jams. The solution is the reconstruc- After studying the experience of other large cities, we tion of outbound routes (which we are actively in the have concluded that the only option for resolving the process of doing) and the construction of relief roads problem of transportation in Moscow is improving the that will help the deficits in the existing road network. operations of public transportation. There is no other Another option is the efficient use of the existing road way. This is why we are actively making additions to the structure. If we clear the roads from parked cars, then metro today. We are adapting existing railway lines for road capacity will increase immediately. I'll reference passenger transportation in the city. And, of course, we Seoul for the sake of comparison. They have 5.2 million are working extremely hard on reconstructing roads and parking places for 3 million cars. In Moscow, we have road junctions, expanding outbound routes to include just over a million parking places for 4 million cars. separate lanes for so that can ad- here to an exact schedule by using these lanes. I am sure It is important to understand that it's impossible to that in a year or two we will be the leaders in terms of construct new roads quickly enough. This is why we infrastructure development for public transport. are implementing two solutions: first, as I already mentioned, the development of public transportation Regardless of these changes, so far Moscow traffic and second, improvement to the road network. Why jams are famous all over the world. People can get do I stress the development of public transportation? stuck in traffic jams even in the middle of the night! Because 80% of Muscovites use public transportation. Why is this? What are the main reasons behind these When people use public transportation, they need to traffic jams? Is it possible to get rid of all these traf- be confident that they will get to where they need to fic jams in the capital? What is being done to address go in time and in a comfortable atmosphere. Prioritiz- this issue? ing public transportation has paid off for a lot of big cities. At the same time, it is obvious that public trans- According to official statistics, there are currently a total portation in Moscow needs to be improved in order for of 4,300,000 cars in our city and another 3 million in the Muscovites to prefer it over cars. The transportation Moscow region. These numbers are constantly growing. development program includes a wide range of initia- In Moscow, for example, there is an additional 300,000- tives that are aimed at creating one of the most up-to- 400,000 new cars every year. The city's transportation date public transportation systems in the world in just infrastructure cannot possibly keep up with this growth a few years. and will probably never be able to keep up with it. At the same time, Moscow is behind other large cities in terms So far as the development of the street and road net- of road density. Our road density is currently about work in Moscow is concerned, we are implementing a 3.5km for every square meter. In Berlin, for example, this large-scale program that includes both the construc- figure is 8.6 km, in London it is 9.3 km, in Tokyo 10.6 km, tion of new roads and reconstruction projects. The in New York 12.4 km and in Paris 15 km. program was launched in 2011. Since then, we have

12 CAPITAL IDEAS October-December 2014 opened a total of more than 230 km of new and re- Road. It aims to, first of all, bring order to traffic flows, constructed roads. Moreover, in the past two years increase traffic capacity and develop areas that are we have launched over 80 km of new roads annually, adjacent to MKAD. These measures will allow traffic which is 4 times more than in 2010. Overall, we are go- to move along MKAD without having to slow down. ing to build 482 km of new roads over the course of 6 According to preliminary estimates, road capacity years (from 2011 to 2016). should increase by 30-40%.

Moreover, starting in the beginning of this year, 13 When solving the transportation problem of a city structures have already been completed (overpasses, as large as Moscow, the most important thing is the tunnels and bridges). We sometimes finish project 6 development of the metro system. Anyone who has months or even a year ahead of regular construction ever used the Moscow underground has been im- schedules for such projects. We don't neglect quality pressed by it. In your opinion, is the fame and glory when we work ahead of schedule, as all of these struc- of the Moscow metro becoming a thing of the past? tures are fairly complicated from a technical standpoint. Our designers and construction workers find solutions The glory of the Moscow metro, which is celebrating its that allow us to meet high quality standards. Recently, 80th anniversary next year, isn't going anywhere. The we put into operation the reconstructed transporta- Moscow metro has always been and will continue to tion junction at the intersection of the MKAD Ring be the most beautiful underground in the world – an Road and Volgogradsky Prospect, which rendered sig- architectural gem that will continue to impress any- nificant improvements to traffic flows around Kuzmin- one who ever has the pleasure of using the metro. This ki, Tekstilshiki, Vikhino, Zhulebino and other areas. This is a standard that we plan on maintaining – we make technically complicated project was constructed over a sure that every new station that we add to the metro period of 1.5 years, which is 5 months ahead of schedule! network possesses its own individual character. In the We also put another structure into operation 5 months beginning of the summer, we even revived the contest ahead of schedule – the overpass and overhead road at for the best design of new metro stations, which hasn't the junction of MKAD-Michurinskiy Prospect and the been held in Moscow in over 50 years! But this is the Mozhaiskiy overhead road. We finished the overpass aesthetic part. Our most important task, of course, is at the junction of Varshavsky Shosse and Ulitsy Aka- the development of the metro. After all, it is no secret demii Angelya a month ahead of schedule as well. We that construction efforts fell behind the city's popula- are also trying to finish a section of the Moscow-St.Pe- tion growth 4 years ago. Over the past 10 years, the tersburg northern lateral road ahead of schedule – the number of Muscovites has increased by at least 2 mil- section that stretches from Businskovskaya junction to lion people (in “old” Moscow) and over 70% of them Festivalnaya Ulitsya. use the metro as the quickest and most convenient form of public transportation. Our goal is to ensure Transportation junctions at the intersections of MKAD that, by 2020, over 90% of city residents will have a are reconstructed as part of a large-scale program metro station within walking distance of their homes. that entails the reconstruction of the Moscow Ring Even today, the pace of construction far outstrips any

October-December 2014 CAPITAL IDEAS 13 FACE TO FACE

previous efforts. To put things in perspective, a total of systemic problems – legal concerns and changes to the 300 km of tunnels were constructed in Moscow over a legal code, solutions to systemic problems such as in- period of 79 years. Over the past three years, we built cluding city property into the economic turnover. and put into operation 25 km. We plan on constructing a total of 160 km over a 10-year period. If you compare Moreover, we have presented the investors with 5 pi- these figures with other European cities, we are in first lot industrial zones for their consideration. The inves- place in terms of metro construction volumes. Globally, tors will prepare a plan for their further development, we are tied for first place with China. as well as a step-by-step process that would result in including these zones into the economic turnover. According to recent estimates, a total of 12.5 km of new metro lines, 6 stations and 2 train yards were put into We understand that the challenges we are faced with operation last year. This is almost 1.5 times more than today (meaning the Moscow government, the business in 2012 and almost three times more than in 2011. community, the construction sector) are impossible to tackle without an effective system of cooperation and This year, we have already opened the Spartak metro feedback from investors. The Moscow Investors Club is station on the Taganskaya- line a special platform that is meant to facilitate a civilized near the Spartak stadium, which will host the FIFA and effective dialogue between business representa- World Cup in 2018. Before the end of the year, we plan tives and government entities that are in charge of the to open another 4 metro stations – Troparevo, Rumy- construction sector and related issues in Moscow. The entsevo and on the and Club includes directors of development, construction Kotelniki on the Taganskaya-Krasnopresnenskaya line. and investment companies whose project portfolios Two of these stations, Rumyentsevo and Salaryevo, total over 50 million square meters of real estate. will be located in New Moscow – an area that doesn't have any operating metro stations yet. Are you including investors in the implementation of the Moscow transport infrastructure develop- We are in the process of constructing a 10-km section ment project? on the Lyublinsko-Dmitrovskaya line (from Maryina Rosha to ) with 6 stations. We plan on Currently, the funding for the construction of road and putting it into operation next year. We are construct- transportation facilities that are of value to the city ing the new Kozhuhovskaya line from the Third Inter- come from the city budget, from the subprogram of change Countour to Nekrasovka. This line will be al- the Moscow Targeted Investment Program. Of course, most 17 km in length and have 8 new metro stations, 4 we plan on attracting investors as well, including coop- of which will be located beyond MKAD. eration with the Moscow Investment Club.

It is worth pointing out that more than half of the capi- We plan to attract private investors to the reconstruc- tal's metro stations are severely overcrowded – they tion of MKAD entry and exit roads that are located near accommodate over 50,000 people per day. This is why shopping centers, car dealerships, cafes etc. We gave 186 we made the important decision to build the second ramps linked to the outer part of MKAD, 134 of which ring in order to redistribute passengers. The first sec- lead to different types of facilities, including large shop- tion of the Third Interchange Contour (this is what the ping centers. We also want to offer businessmen to take second metro ring is called) will be put into operation part in the construction of slip lanes. A lot of owners are in 2015. We expect the passenger load outside of the interested in this, since it would mean additional clients. TRC and on the ring line to decrease by 30-50%. Almost all big companies are ready to take part in these There are currently 25,000 people working on the con- projects, since heavy traffic jams means that they have struction of the metro and we have 22 tunnel-boring fewer customers. For example, the businessman Aras machines in operation. Construction work is taking Agalarov is interested in building a U-turn overhead place at 350 different sites, including preparation stag- road and a slip lane near the Vegas Shopping Center es. Before 2020, the total length of metro lines will in- and Crocus City. The urban planning documentation crease 1.5 times: we plan on constructing over 160 km for investor participation is being prepared for a total of lines for a total of 79 metro stations. of 29 road structures that are mostly located beyond MKAD. By the way, in this case road budget contribu- Could you tell us a little bit about the Investors Club tions will increase as well. created under the government of Moscow? Investors are considering taking part in the construc- The Moscow Investors Club was founded in May of last tion of transport interchange hubs as part of the TIC year. It is an entity that helps the Moscow Government development program at Moscow railway stations, in- find optimal solutions to key problems when working cluding radial lines, the Small Ring of the Moscow Rail- with investors. We agreed that we will focus only on way and metro stations. ■

14 CAPITAL IDEAS October-December 2014 October-December 2014 CAPITAL IDEAS 15 CITY’S GRAPH Planned budget for the development of new transportation infrastructure between 2012 and 2020 (Bln. Rub)

The Moscow Government plans to allocate around 2.9 trillion rub for the improvement of the city’s transportation structure and quality of life before 2020.

Funds from the federal budget

Moscow City budget

Plans for 2020 Private investment

▪ 495.5 km of metro lines (158.2 km of new lines, or Metro / 1.408 bln. rub. 50% increase) ▪ 257 stations (77 new stations, 39% increase) ▪ purchase of 3,522 new metro cars (70% new cars) ▪ 87% of the population residing in locations accessible by metro, or within 2km of a metro station 1.239 bln. rub

169 bln. rub

▪ Construction of 167 engineering structures Street Road Network / 1.445 bln. rub. ▪ Road construction in New Moscow (78.6 km of roads) ▪ Reconstruction of outbound routes and chords (over 400km) 13 bln. rub ▪ Renovation and maintenance of the road network 1.392 bln. rub ▪ Construction of the backup road for Kutuzovsky Prospect via private investments 40 bln. rub

▪ 240 km of additional main lines Railways /321 bln. rub. ▪ Increase in passenger capacity in two, up to 1.3 billion passengers ▪ Construction of the Small of the Moscow Railways with passenger capacity of 300 million 159 bln. rub passengers per year ▪ Launch of 226 new trains, including 24 two-story 34 bln. rub trains 128 bln. rub ▪ Reconstruction of 9 railways terminals and 32 Source: Moscow Department of Transportation and Transport passenger stations Infrastructure Development

16 CAPITAL IDEAS October-December 2014 Planned budget for the development of new transportation infrastructure between 2012 and 2020 (Bln. Rub)

Plans for 2020 Above Ground Public Transit

▪ Construction of 272 transport interchange hubs (192 major hubs and 80 junctions) ▪ 100% renewal of the above-ground transport fleet, about 14,000 car units ▪ Modernization of about 300km of lines Parking and Transport and construction of about 300km of tram lanes Interchange Hubs ▪ Creation of a bike rental system, organization of about 300km of bike lanes and installation of 18,000 bike parking places ▪ Implementation of a paid parking system ▪ Implementation of an ITS system throughout Bike, Pedestrian and the city Navigation ▪ Development of a new ticket and tariff system ▪ Construction of a cargo frame, implementation

of restrictions on cargo vehicles in certain 6 bln. rub city areas, especially taking into consideration environmental ratings of vehicles 234 bln. rub ▪ Design and installation of 21,000 transport 1.026 bln. rub navigation objects (maps, charts, displays etc.) Traffic Management ▪ Improvement of zones 1200m around metro stations ▪ Construction of 34 helicopter platforms in the city ▪ Organization of regular passenger water Air Transport transportation routes

Water Transport

Total: 178 bln. rub 2.899 bln. rub 1.363 bln. rub

4.440 bln. rub

October-December 2014 CAPITAL IDEAS 17 INTERVIEW

Alexander Evsin Our goal is to create a city that is comfortable and easy to get around

Deputy head of the State Public Alexander, could you please talk about what the CODD Situation Center does? Institution "Center of traffic organization of the Government of The CODD Computing Center serves as the techni- cal center for the entire intelligent transportation Moscow" (CODD) and head of the system in Moscow. There is a lot of equipment in- stalled throughout the city and the information we CODD Situation Center Alexander receive from this equipment is processed on our Evsin talks about the development of servers. The intelligent transportation system per- forms functions of monitoring, management, com- road safety and traffic engineering. munication and control.

The Situation Center has been in operation since De- cember of last year and right now we are working on installing more equipment on the city streets and improving our software. Our goal is to manage the entire transportation system in Moscow.

Right now, the Federal Authority for Road Traffic Safety is in charge of traffic control and the CODD performs planning functions. However, we are cur-

18 CAPITAL IDEAS October-December 2014 Our goal is to create a city that is comfortable

rently in the process of transferring traffic control re- different methods for collecting information. Yandex sponsibilities to municipal services. In the future, the obtains their data from mobile apps, mobile opera- Federal Authority for Road Traffic Safety will be fo- tors track movements and we have a network of de- and easy to get around cused on issues of inspection, road safety and policing. tectors. We also use third-party services from various other sources – there are hundreds of thousands of What do you use to ensure traffic monitoring? them – but it's hard to interpret and classify the infor- mation. We have much more accurate readings. There are currently 7,000 strategic motion detectors deployed throughout the city that control 11,000 di- When we combine all of this information, we get an rections, including traffic in each separate lane. They accurate picture of traffic flows, which we then dis- monitor the number of passing vehicles, intensity, av- play on information boards for drivers. There are 144 erage speed and instantaneous velocity. These data information boards throughout the city that inform are then processed and turned into a general over- drivers about traffic jams and other important devel- view of the traffic situation, serving as raw data for opments. transportation models. That is, we can not only moni- tor, but also to make predictions. Before we imple- Do the Center's operators use traffic lights for traf- ment traffic plans, the operator can view his model. fic management? This is a tool that allows us to quickly make the right decisions. Not exactly. Almost all of the 2100 traffic lights cur- rently operating in Moscow are adaptive. That is, Do you work with third-party services when moni- they are equipped with motion sensors that detect toring traffic? the number of vehicles in a given direction. De- pending on traffic congestion, the traffic lights self- We try to obtain data from all companies that work adjust in terms of light length and traffic intervals. in our sphere. At the moment, there is a constant ex- Not long ago, we were assigned the task of making change of information with the service Yandex-prob- pedestrian traffic lights adaptive as well, so this will ki, as well as all mobile operators. We have a lot of be our next step.

October-December 2014 CAPITAL IDEAS 19 INTERVIEW

We strive to create a coordinated management sys- eras that allow the operator to see everything on the tem, where the traffic lights are not only adaptive in road, down to small details. The cameras have lens terms of local traffic flows, but can also be coordinat- wipers, which means that operators can use them ed with each other in order to form a single network. even during bad weather conditions. In this case, we would be able to have significant con- trol over traffic flows in the city. Our next step is to These cameras, in addition to our system, will be in- launch a program that will coordinate such a system cluded in the city's Center of Data Storage and Pro- by analyzing key traffic monitoring indicators. cessing (CDSP) system, which operates as part of the state program of the city of Moscow called "Safe City." What functions do the video cameras, which seem The CDSP includes a total of 150,000 cameras, all of to be appearing in more places throughout the city, which we also have access to. perform? Is New Moscow also included in this surveillance There are a total of 817 video cameras installed system? throughout the city. The cameras monitor speeding violations and detect unauthorized vehicles that cross Not yet, but it definitely will be in the future. First, we over into public transportation lanes. They are also are planning to install mobile video cameras. These used to manage truck schedules along the Garden are cameras that will be mounted on top of moving Ring and the . vehicles. We have seven of them so far and are cur- rently in the process of acquiring another 40. Until recently, these cameras were used solely to monitor traffic violations, but it has been decided that Most likely, New Moscow will have another local Situ- they will also be used to monitor traffic flows in gen- ation Center. There is already one in Zelenograd. This eral. That is, our operators can see what is happening is very convenient, considering the fact that the loca- on the road in a particular place through the camera. tion is so remote. At the same time, the camera itself will operate as a motion detector, tracking congestion, average speed What happens to all of this data afterward? and the number of passing vehicles. We are constantly running a program that analyzes all We have also developed a video monitoring system. the data from all sensors and traffic flows in general. Every intersection is equipped with 30x zoom cam- Right now, we are particularly interested in traffic

20 CAPITAL IDEAS October-December 2014 jams and single car breakdowns in the general flow of tem has a lot in common with the system imple- traffic (RTA). In the future, monitored cases will in- mented in Madrid. It has been adapted to Moscow clude any deviation away from normal traffic flows. and improved. Madrid used to have worse traffic problems than Moscow, but a lot has changed over When something happens, the program displays the past 10 years, and now traffic is much better a message, and the operator can zoom in and see organized. what happened. Next, the operator calls the police, ambulance or the fire department, and can clear the This collaboration has been very helpful for us, espe- road for emergency services in case there is a seri- cially in terms of implementing the system through- ous accident. out the entire city. However, I believe that the soft- ware was developed in Russia, as we have all the So in case of an accident, every party will have an facilities and competencies for it. independent witness? Aside from the fact that we are still working with This is a very important aspect of our job. We are try- SICE, we constantly familiarize ourselves with traf- ing to make life easier for drivers in terms of helping to fic management systems of different cities through- determine the reasons behind RTAs. Currently, RTAs out the world. In June, we were in China as part are the most common reason for traffic jams in Mos- of the Moscow delegation during the State visit of cow and all parties are interested in seeing the drivers the President of the Russian Federation. We had a vacate the road as quickly as possible in order to clear chance to study the traffic management systems im- traffic jams. For this reason, we are planning to collect plemented in Beijing and Shanghai. China, of course, video evidence for RTAs and immediately forward it to is quite developed in this particular area, but I didn't insurance companies and to the police. Drivers will no see anything that we can't also potentially imple- longer have to wait around for hours in the middle of ment in Moscow. the road because of a scratch on a bumper. What are your goals for the near future? Could you tell us a little bit about your international collaboration? We are conducting a lot of research. Our main fo- cus is directed toward modeling traffic flows and Our system was developed in cooperation with the creating an automated traffic flow management Spanish company SICE, and the traffic control sys- system. ■

October-December 2014 CAPITAL IDEAS 21 MOSCOW IN WORDS

“You will not grasp her with your mind Or cover with a common label, For Russia is one of a kind — Believe in her, if you are able...” Fyodor Tyutchev, Russian poet

“Watching a woman make Russian pancakes, you might think that she was calling on the spirits or extracting from the batter the philosopher's stone” Anton Chekhov , Russian author, playwright

”The cleverest of all, in my opinion, is the man who calls himself a fool at least once a month” Fyodor Dostoevsky, Russian writer, journalist and philosopher

22 CAPITAL IDEAS October-December 2014 “Everyone thinks of changing the world, but no one thinks of changing himself” Leo Tolstoy, Russian writer, philosopher and political thinker

“In days of doubt, in days of dreary musings on my country's fate, you alone are my comfort and support, oh great, powerful, righteous, and free !” Ivan Turgenev, Russian novelist, short story writer

“In the carriages of the past you can't go anywhere” Maxim Gorky, Russian and Soviet writer

October-December 2014 CAPITAL IDEAS 23 MOSCOW GLOBAL Li Hui: Our relationship is the at its best point in history The incumbent Chinese Ambassador to Russia Li Hui answered Capital Ideas’ questions.

How would you evaluate the current state of Chi- Federation On A New Stage In The Relationship Of A nese-Russian relations? Comprehensive Strategic Partnership, which outlines the steps for future development and maintenance of In recent years, due to joint efforts and actions from Sino-Russian relations. It was stressed that China and both sides, high-level contacts have become incred- Russia have established a new type of interstate, with ibly close, practical cooperation is expanding steadily, more potential for further development. Taking this cultural exchanges are booming and effective stra- comprehensive equal partnership of trust and strate- tegic cooperation between China and Russia contin- gic cooperation to a higher level will be a key factor ues. We can say that the Sino-Russian relationship of in ensuring the vital interests of the Parties in the XXI comprehensive strategic partnership and cooperation century, creating a just, harmonious, secure world or- is currently experiencing the best period in the history der. of its development. Secondly, the practical cooperation between China Firstly, the political trust between China and Rus- and Russia reached a new level. The parties signed sia has reached new heights. Since last year, Chinese a set of intergovernmental and commercial agree- President Xi Jinping visited Russia three times. He ments on cooperation in the economic, trade, energy, was present at the G-20 summit in St. Petersburg military, humanitarian, educational, and agricultural and at the opening ceremony of the Winter Olym- sectors. The documents also address areas such as pics in Sochi. His visits to these events fully reflect law enforcement operations, inter-regional coopera- the exceptional nature of Sino-Russian comprehen- tion, environmental protection, finance and invest- sive strategic cooperation and partnership. In May ment, and construction of basic infrastructure. The of this year, Russian President paid a current high level of strategic cooperation between successful visit to China. He participated in the fourth the two countries increases the effectiveness of prac- summit of the Conference on Interaction and Confi- tical cooperation, which benefits both nations. In dence Building Measures in Asia, which was held in 2013, trade between China and Russia reached 89.21 Shanghai. The two leaders signed the Joint Statement billion dollars, which enabled China to be ranked first Of The People's Republic Of China And The Russian for four consecutive years in the list of Russia’s foreign

October-December 2014 CAPITAL IDEAS 25 MOSCOW GLOBAL

trade partners. In the first half of 2014, Sino-Russian curity Council. The parties are developing cooperation trade volumes reached 44.54 billion dollars, while the through mechanisms such as the Group of 20, APEC, increase over the same period last year was 3.3%. I BRICS, SCO, CICA, Russia-India-China (RIC), contrib- am sure that the task of increasing bilateral trade to uting to the resolution of problems such as the de- $100 billion by 2015, and to $200 billion by 2020 is fully velopment of global economic governance, increasing achievable. the representation and voice of states with emerging markets and developing countries, promoting region- Thirdly, the cultural exchanges between China and al economic integration, fighting against the forces of Russia have borne new fruit. In continuation of ex- the "three evils" (terrorism, separatism and extrem- changes of "national years", "Years of Languages" and ism), conducting non-proliferation of weapons of "Years of Tourism," in March of this year, the parties mass destruction, fighting against international - ter launched "Years Of Friendly Youth Exchanges." This rorism and drug trafficking, protecting international will further strengthen contacts between the youth of information security and maintaining space security. the two countries, facilitating the transfer of the tradi- The parties also maintained close communication and tions of our friendship from generation to generation. effective interaction in sensitive international chal- Both sides opened cultural centers in Beijing and Mos- lenges such as the situation in Syria, Iran's nuclear cow in October 2009 and in December 2012, respec- program, the situation in Afghanistan and the nuclear tively, which have become important platforms for the issue on the Korean Peninsula. By making positive ef- strengthening of friendship and mutual understanding forts to promote political solutions to international between the two nations. In accordance with the "Pro- and regional conflicts, we have made a significant gram of Cooperation between the Ministry of Culture contribution to peace, stability and development at and the Ministry of Culture of China in 2014-2016," the the regional and global level. two sides will cooperate in carrying out a number of events in areas such as music, theatre, film, fine art, Finally, China and Russia have found new common folk art, conservation and restoration of monuments, ground in the development of ideas of governing libraries, museums and archival trade. the state. Chinese President Xi Jinping put forward the concept of the "Chinese Dream," the premise of Additionally, Chinese-Russian international coopera- which is to create a rich and powerful state that con- tion has entered a new phase. Both sides unanimously tributes to the rise of the nation and people's welfare. consider it necessary to reinforce the key role of the The concept has gained widespread acceptance in UN in international affairs, and calls upon all states to various circles of Russian society. The Russian me- abide by the UN Charter and the generally accepted dia called the idea put forward by Russian President principles and norms of international law, and support Vladimir Putin the "Russian dream,” which is "to reach the holding of a fair and necessary reform of the Se- the level of developed countries in per capita GDP by

26 CAPITAL IDEAS October-December 2014 2020." Both China and Russia are making every effort tions of the peoples of the two countries, reflecting to strengthen the power of the state and welfare of our friendship that has been handed down from gen- the people, ensuring peaceful development. These eration to generation. The meetings illustrate the firm tasks are so interconnected and specific that the two conviction that our countries should always be good countries place even greater hope in future develop- partners, neighbors and friends. That is a powerful in- ment. They focus on mutual understanding and on centive, given the inexhaustible vitality and dynamism the strengthening of Sino-Russian comprehensive of permanent relations between the two countries. strategic cooperative partnership. On the other hand, such exchanges and consultations are an example of new trends and developments in What would you say the recent meeting of the 21st century international relations. We are talking leaders of the two countries has demonstrated, for about non-alignment and non-confrontation. We are both China and Russia, and for the entire world? not directing this alliance against third countries. Chi- na and Russia demonstrate a good example of mutu- In May of this year, Chinese President Xi Jinping and ally beneficial cooperation and peaceful coexistence Russian President Vladimir Putin held a meeting and between two powers. This reflects the awareness, by participated in the CICA Summit together. The two China and Russia both, of one historical law, that of leaders reached a number of important agreements the irreversibility of the trend towards a multipolar on the further development of Sino-Russian relations world. Thus, Sino-Russian relations demonstrate to and cooperation in all spheres, together contributing the whole world the basic principle of regulation of to reaching a new level of Sino-Russian comprehensive interstate relations, and make a positive contribution strategic cooperative partnership. In the second half of to peace, stability and development throughout the July, the two leaders were present at the 6th BRICS world. summit. During the summit, the heads of the two countries continued to communicate. This was the One of the results of Sergey Sobyanin’s visit to Bei- third meeting between the leaders of China and Rus- jing was the signing of a memorandum on the par- sia this year. The leaders agreed that both sides should ticipation of Chinese partners in the construction enhance mutual political support, increase the depth of the Southwestern line of the Moscow Metro. and breadth of cooperation, take more joint action on To what extent are Chinese investors interested international issues, improve global governance, pro- in Russian and Moscow markets? What areas are mote the democratization of international relations most attractive to them? and promote development and peace in the world. First of all, I would like to warmly congratulate my old On the one hand, regular meetings between the friend Sergey Sobyanin on a successful visit to China. heads of China and Russia meet the common aspira- Due the efforts of the two Presidents, Sino-Russian

October-December 2014 CAPITAL IDEAS 27 MOSCOW GLOBAL

investment cooperation is growing very quickly, es- cities, human resources development, facilitation pecially when it comes to the volumes of direct in- of administrative procedures and improvements to vestments from the PRC in the Russian Federation. the operations of various departments. I have no By the end of 2013, the volume of accumulated invest- doubt that even more Chinese entrepreneurs will ments of China in the Russian Federation exceeded invest and do business in Russia if these improve- 32.1 billion dollars, and annual growth was 8.4%. In the ments are made. first half of this year, China's non-financial investment growth in Russia amounted to 109.5%. What do you think about the decision to turn Mos- cow into an international financial center? Recently, China Railway Construction Corporation signed an agreement with Russian partners on co- Moscow is home to 80% of Russian bank assets and operation in the development of the Moscow metro. almost 80% of the financial flow passes through Mos- It includes a contract to build 150 km of lines of the cow's financial system. Currently, 90% of headquar- Moscow metro, along with over 70 metro stations. ters of financial institutions operating in the Russian This project will be the largest recent project to build Federation are located in Moscow. Moscow certainly an underground railway in Europe. In addition, Chi- is the economic center of Russia. China is very recep- nese companies have expressed great interest in in- tive to the fact that the government’s "Strategy of dustries such as oil and gas, electricity, nuclear power, development of the financial market of the Russian space, civil aviation, construction, construction con- Federation for the period up to 2020" sets an explicit tracts, finance, agriculture, and basic infrastructure. goal: "to turn Moscow into the fifth largest global fi- Chinese companies have already identified a number nancial center by 2025." China is interested in joining of major strategic projects. I am confident that the this process. implementation of the above projects, as well as co- operation in the relevant fields will give new impetus To date, the majority of Chinese reputable banks such to the comprehensive improvement of Sino-Russian as the Bank of China, Industrial and Commercial Bank, economic and trade cooperation. Construction Bank, the State Development Bank and the Export-Import Bank have opened subsidiaries or Tell us about Chinese businessmen that are already representative offices in Russia. The Agricultural Bank working in Moscow, in Russia. What do they like of China Is preparing to open a subsidiary bank as and what do they dislike? well. The two countries are also actively expanding settlements in national currencies. China is ready to In recent years, the Russian government has put for- take advantage of the current opportunities for fur- ward a "strategy of modernization" and has made the ther expansion of trade-economic and investment privatization of state assets a priority. This attracted cooperation with Russia and in bilateral and multilat- even more foreign investors to participate in the pro- eral formats. cess of privatization of state property in Russia. At the moment, in a slowing global economy, the Russian How attractive is Moscow to Chinese tourists? government pays even greater attention to improving What, in your opinion, do the words "Moscow, Rus- the investment climate and business environment. sia" mean to the Chinese? They are looking to draft more than 160 bills aimed at simplifying the procedures for foreign investment Russia is situated on two continents — Europe and registration and reducing barriers to entry for foreign Asia. It is a country with an ancient history, a rich and investors, opening 28 special economic zones, as well diverse natural environment and attractions that cre- as creating a rating system to assess the investment ate perfect conditions for the development of origi- climate for different regions. Chinese businessmen nal forms of tourism, such as guided tourism, medical have felt noticeable improvements in the Russian treatment at the hot springs, cruises along the riv- business environment. In 2013, Russia ranked 92nd in ers, fishing and hunting, mountaineering and skiing. the favorable business environment ranking accord- These and other recreational activities are very popu- ing to Doing Business, which is published by the World lar among Chinese tourists. Bank and the International Finance Corporation (IFC). The country’s rose an impressive 20 positions, for the In 2012 and 2013, China and Russia held the success- first time entering the top 100 and even overtaking ful exchange called Tourism Years, which not only China in this ranking. familiarized people with the tourist resources of the partner country and contributed to the development Of course, additional efforts can still be made in ar- of tourism as a whole, but also strengthened the eas such as the consideration of labor quotas, the sense of cultural affinity and mutual understanding reduction in operating expenses in the European between our two nations. This has strengthened and part of Russia, especially in Moscow and other big broadened the social base of friendly relations be-

28 CAPITAL IDEAS October-December 2014 tween our countries, resulting in a diverse and com- Russian literature and art are a precious heritage of plex effect. According to statistics published by Rus- human civilization. sian and Chinese authorities, tourist arrivals exceeded 6 million person-times during Tourism Years. China I must also stress that with the in-depth develop- ranked second in the number of incoming tourists to ment of Sino-Russian relations in recent years, Chi- the Russian Federation and Russia ranks third among nese people have become more aware and can better foreign tourists to China. understand Russia, as led by President Vladimir Pu- tin. In China, there is a deep respect for the successes Moscow, as the political, economic and cultural center achieved over the past ten years. China is a friend- of Russia, is the most popular destination for Chinese ly nation at heart and we always wish the best for tourists. This was certainly evidenced by the constant our good neighbor and partner Russia – to only live opening of new flights connecting Moscow and ma- through joyful events and achieve new levels in terms jor cities of China. In addition to traditional routes, of governmental construction. Chinese tourists are also showing great interest in the historical events and buildings that are relevant You are an old-timer in Moscow. How do you and to the Chinese Communist Party and the victory in your family like living and working in our city? Do World War II. To mark next year's 70th anniversary of you have any favorite places in Moscow? the victory in the global war against fascism, the two sides will hold a series of large-scale festivities, includ- I am successfully working in Moscow, and my family ing tourism sector events. Travel resources of the two feels happy here. I love to walk with my family in Mos- countries are working closely on the in-depth devel- cow parks or relax outside the city, enjoy the beautiful opment of tourism resources and the development of Russian nature, to feel the warmth and hospitality of Russian "red tourism" routes. the Russian people. I often visit Moscow museums or art fairs to feel the power of Russian art and tradi- To the Chinese, the words "Russia" and "Moscow" tional wisdom of the Russian people. It keeps me in conjure up beautiful images of the , nu- good health, both physically and mentally. merous historical and art museums, amazing ballet, colorful circus performances, warm and melodic tra- I would like to take this opportunity to convey through ditional songs, varied cathedrals and churches, pow- your publication a warm thanks to all of our friends erful and majestic architectural structures. Russia is from various circles in Moscow. I’d like to thank them also associated with literary geniuses like Pushkin, for all the times they supported the work of the Em- Lermontov, Dostoevsky and Tolstoy, as well as the bassy of China in the Russian Federation, as well as plethora of great composers and performers — Glin- my life and work here! I sincerely wish for Moscow to ka, Tchaikovsky and Rachmaninov – and the masters become more beautiful every year, as well as happi- of painting — Repin, Surikov and Levitan. Brilliant ness and joy to the city’s residents. ■

October-December 2014 CAPITAL IDEAS 29 INTERVIEW Mikhail Vyshegorodtsev: I'm always on the side of business

In the Russian capital, a new institution has emerged: the Institute of the Commissioner for the Protection of Entrepreneurs’ Rights. What does the Institute do? This in an exclusive Capital Ideas interview with the head of the organization — Moscow’s business Ombudsman Mikhail Vyshegorodtsev.

Mr. Vyshegorodtsev, when and why was the department plaints of entrepreneurs. After all, our main task when con- that you are the head of created? tacted is to competently determine whether or not the rights of a business were infringed upon by major authorities or local It wasn’t the department that was created first, but the actual authorities. If the answer is yes, our task is to protect the busi- post of a city business Ombudsman. It was established by the ness by applying measures permitted by law against negligent decree of the Mayor of Moscow under the relevant law, which officials. I’d like to point out that businessmen started asking was adopted at the end of last year after the federal law on for my help as early as in the autumn of last year, when the the Ombudsman for the protection of Entrepreneurs' Rights mayor had just announced the establishment of the position under the President of the Russian Federation. Thus, now in of the city’s business. I hadn’t even officially began working Moscow there are three Ombudsmen: on Human Rights, Chil- back then – the mayor just mentioned my name as one of the dren’s Rights, and the Rights of Entrepreneurs. possible candidates. I immediately started receiving messages, telegrams that read, “Help, help, we’re being destroyed!” Were these three posts set up in this order? So, there is demand from entrepreneurs for what you do? No, the Children’s Rights Ombudsman post was created first, then the Human Rights Ombudsman. Now, there is a post for Absolutely. We provide an opportunity for them to stand up for the protection of the rights of entrepreneurs as well. By the their rights, their business. Which is why, bearing this in mind, we way, two positions are, so to speak, under the jurisdiction of set out to be quick about not just putting together a team, but the : it appoints people for those positions. providing a feedback system, the so-called document flow. At The position of Human Rights Ombudsman is the prerogative first, all the correspondence went through Tverskaya 13, but now of the executive branch of Moscow government. we are accepting applications directly. At the end of July we even launched our own website: business-ombudsman.mos.ru As soon as the mayor signed a decree for my appointment on January 13, 2014, we started creating a management structure Now you can simply leave a message of complaint there, and and hiring people to ensure all necessary functions are car- we’ll instantly start processing it and working on it. It allows ried out. My team currently has 25 employees. They are mostly us to save time, which is crucial because time is so important lawyers, although there are also some auditors and consul- in business. Much relies on how swiftly we can resolve an is- tants. In short, we hired people who had professional experi- sue – sometimes the question of whether or not the business- ence in the judicial or legal system; those who have worked man will get to keep their business is on the line. I can bring professionally with different appeals, applications or com- up many examples. Now, luckily, it’s all done online. There is

October-December 2014 CAPITAL IDEAS 31 INTERVIEW

also a lot of educational and useful information for entrepre- Yes, if the rights of the international businessmen working in neurs: on the Community Council, the Expert Council under the city are infringed upon by the local authorities. The reason the Commissioner, the Public Chamber of the Commissioner, why I am stressing this point is because we don’t get involved analytical and statistical data and a promptly updated regu- in disputes between owners. latory framework. We also publish announcements of events held in Moscow with the participation of the Ombudsman. By the way, when Sergey Sobyanin introduced me to the Gov- ernment in January, he said that the Ombudsman for the Pro- In short, the system of electronic document flow is like clock- tection of Entrepreneurs’ Rights should engage and support work. There is no need to produce a pile of papers. Once we re- investment. That is to provide the investors, including foreign ceive the treatment, we immediately process it and send it to ones, with aid should they have any difficulties in implement- the relevant department - the Department of property, trans- ing their projects in Moscow. I am not the only person in the port, utilities, or any other. The department then takes action al- capital who offers such assistance. The Deputy Mayor Marat most immediately. By the way, according to Moscow law, in the Khusnullin and Natalia Sergunina and Sergey Cheremin, head framework of which we operate, the response time for an Om- of the Department of Foreign Economic and International Re- budsman’s request is 15 days. That’s less than for an MP inquiry. lations also work with foreign investors.

I justified the need for such hastiness by the fact that de- What is the current investment climate in Moscow? lays can be deadly to a business. That’s why an entrepreneur should get their queries resolved promptly. Given the situation with the sanctions, a simple answer to your question is, of course, difficult to give. All these sanc- What kinds of problems do the entrepreneurs bring to your tions will certainly affect things. First of all, the sanctions will attention? impact the decisions of businessmen who might be contem- plating coming to Russia. And yet, I can say that there are Eighty per cent of their appeals concern property and land is- plenty of people who want to invest in Moscow. The fact is sues. There are complaints against executive authorities that that the high yields that foreign businessmen can obtain in unreasonably inflate rent prices, refuse to sign lease contracts, Russia cover all the risk-associated costs. Those who are al- purchase or sell land or provide appropriate benefits. People ready working in Russia have long since figured this out. I come to us with other problems as well. For instance, in March, will say more: many of these investors frankly told me that a businessman reached out to us asking to help the team stop the situation with sanctions is beneficial. Why? Because they a corporate raid from taking over and destroying a company have fewer competitors in our market now and, therefore, operating in the textile and light industry. Another entrepre- more opportunities. neur from the social sector requested assistance in obtaining a no contest for renting residential premises owned by the city. Overall, I'm surprised at how politics affect business. I was These benefits are provided by law. Another shop owner asked genuinely amazed that even strong Western companies to- for help to renew the license to sell alcohol products... day are afraid of reprisals from their own governments, if they dare to disobey politicians. Unfortunately, as it turns Of course, we review every case. How many people have we out, it’s not that politics is the continuation of the econo- helped in our half a year of operation? Maybe 25-30. Doesn’t my, but the economy is the continuation of politics. This is seem like much, but we evaluate our work by quality, not sad. But in principle, I believe that the situation will change quantity. The more applications we get, the better our work for the better. Business, you know, always stays optimistic. will become. Why? Because there is word of mouth advertis- Things will get better. ing. As soon as we start helping people, they pass on the infor- mation about us to others, recommend us to their colleagues: Of course, sooner or later, sanctions will be lifted. But, say, “contact the office of the Ombudsman for the Protection of from your point of view, what does Moscow have to do for a Entrepreneurs’ Rights, they will help.” foreign investor to come to Russia without fear?

Looks like you’ll become feared soon… It is necessary to reduce the number of obstacles. In the first place, the number of documents required for entry into the That’s not my goal. My goal is to provide the Mayor of Moscow business. Secondly, we should not try to change the rules mid- with an unbiased assessment of the business climate in Mos- game. Third, or laws need to be more flexible – this is definitely cow at the end of this year, pointing out all the problem areas. a must-do. But in general, I want to note that the foreign inves- By the way, the Mayor and I have an agreement where I attend tors have a lot more rights than domestic ones. The federal law a meeting with him every two months, and we discuss all the on the protection of investments is on their side. pressing issues that need solving. I use this right quite actively. What areas are most attractive for foreign investors in As far as I know, you are legally obligated to protect the Moscow? rights not only of local businesses, but of foreign ones too, is that correct? That is, without exaggeration, almost the entire city. ■

32 CAPITAL IDEAS October-December 2014 useful info

Department for external economic and international relations of the Government of Moscow Address: 13 Tverskaya Street, Moscow, 125032 Ph: +7 (495) 633 68 66 Fax: +7 (495) 633 68 65 E-mail: [email protected] www.dvms.mos.ru Department of Science, Industrial Policy and Entrepreneurship of the Goverment of Moscow Address: 22 Voznesensky Pereylok, Moscow, 125009 Ph: +7 (495) 957 05 10 Fax: +7 (495) 957 05 92 E-mail: [email protected] www.dnpp.mos.ru Department of Economic Policy and Development of the Government of Moscow Address: 21 Voznesensky Pereylok, Moscow, 125032 Ph: +7 (495) 957 01 54 Fax: +7 (495) 629 33 42 E-mail: [email protected] www.depir.ru Department of City Property of the Government of Moscow Address: 20 Bakhrushina Street, Moscow, 115054 Ph:+7(495) 959 18 88 Fax: +7 (495) 959 19 82 E-mail: [email protected] www.dgi.mos.ru Moscow Exchange Address: Office 1: 125009 Moscow, Bolshoy Kislovsky per, 13 Office 2: 125009 Moscow, Vozdvizhenka Str, 4/7, Bld 1 Phone: +7 (495) 363 32 32, +7 (495) 232 05 55 Fax: +7 (495) 705 9622 www.moex.com

October-December 2014 CAPITAL IDEAS 33 NOTHING VENTURED Jörg Schreiber My heart has two countries and two homes: Moscow and Berlin

Jörg Schreiber was born in Berlin Mr. Schreiber, you have lived in Russia for a long time. Do you remember the first day you came to but knows Russia as well as his our country? What memories do you have that native country. He is undoubtedly have survived this long? one of the most famous and It was during the years of the USSR when I was a member of a student group that came here to influential people in the Russian study. At the time it was very prestigious to study automotive business. For several in the Soviet Union and I was delighted to have the opportunity to study Russian. I lived in a student years, Mr. Schreiber has headed the dormitory with three other students sharing a small room. Everything was interesting and exciting for Russian representative office of young people in those days, the city, the people, Mazda, and also holds the position the architecture and I have very fond memories of those times. When Gorbachev was voted as presi- of Chairman of the Automobile dent the change brought more freedom and the opportunity to talk openly about the past and pres- Manufacturers Committee of the ent. Amongst the students there were no nation- Association of European Businesses alities but there were many people from different countries all around us. Even then, I realized how (AEB) in Russia. Mr. Schreiber caught great multi-national communities can be, I had the unique opportunity to study while learning about the very beginning of the formation different cultures, to join them and explore their of the country's car market and has cultures and beliefs. not only seen its development, but is When did you come to Russia as a businessman?

instrumental in the process involved. It was during the 1990s, I had already started work- Schreiber came to Russia for the first ing in the auto industry, but after a few years of working in Russia, I returned to Germany. The time as a student during the Soviet knowledge and experience I have gained in work- ing in different markets, the US, Great Britain, and Union years. other countries, has been one of the most exciting

34 CAPITAL IDEAS October-December 2014 My heart has two countries and two homes: Moscow and Berlin NOTHING VENTURED

areas of my job. I returned to Russia in 2004 and Which Russian tradition do you especially like? became the head representative of Mazda in Rus- sia, becoming part of this amazing team that laid I love traditional Russian cuisine. It has absorbed the foundation for Mazda's business development elements of different cultures. I enjoy cooking, and in the Russian market. know how to cook Russian dishes such as borsch, kholodets, and pelmini. I like the Russian people As a German, was it difficult for you to start and the way they socialize regularly. The strive for working in a Japanese company? informal communication and the habit of spending time with friends are the things that distinguish the Previously I had not encountered the language and Russian character. Plus the constant need for ad- culture of Japan, or the Japanese style of company ventures! management. But working at Mazda was a way for me not only to increase my professional knowl- Mr. Schreiber, in your opinion are the inhabitants edge and skills, but also an opportunity to widen of Moscow are different from people in other cit- my horizons and worldview, to experience a new ies? and amazing culture, and to meet a lot of interest- ing people. I am constantly learning and striving for Certainly! In my opinion any foreigner who travels new knowledge and experiences. Therefore, work- beyond the Moscow city boundaries can see these ing in a Japanese company was not an overwhelm- differences. Residents of Russian cities are much ing challenge for me. more friendly and talkative. You can see the qualities in them that are so difficult to see in Muscovites at Do you feel at home in Moscow? first glance. Here in Moscow lots of people struggle to survive and fight for their survival. In addition, the Yes, of course. In my heart I have two countries and further from Moscow, the fewer hassles and stress. two homes - Moscow and Berlin. My daughter was Even in St. Petersburg the pace of life is much calmer. born and raised in Russia. In general, home is where But it is more interesting to live in Moscow, with its the heart is. different cultures, diversity and people.

Do you have a favorite place in our city? What are the special characteristics that are dis- tinct about the business environment in the Rus- My favorite place is my home. Because of my busy sian automotive market? schedule I am more out than in! My family and I live in the Moscow suburbs in a house located near a lake and Any businessman, regardless of the market and a forest. I love walking my dog and relaxing at home. the country, strives to make more money. Rus-

36 CAPITAL IDEAS October-December 2014 sian entrepreneurs in the automotive business are and formation of the automotive market for the counting on a quick return on investment. This was past several years. We hold numerous meetings particularly evident during the initial stage of devel- with government officials and discuss ways to im- opment of the automotive business in Russia. Times prove the Russian automotive market, as well as a have changed and now in order to bring business variety of framework agreements, working condi- to the level of profitability, you have to wait longer. tions for importers, dealers, and manufacturers in But I am convinced that any business can be profit- industrial assembly operations and much more. able if you work conscientiously and act within the After all, it comes down to the fact that the mar- framework of agreements. ket is subject to the rules of the market economy. At times, it is impractical to maintain constant de- Is it difficult for you to work with Russians? velopment subsidies. We need to work out in the first place, the mechanisms of its development and It's easier to work with Germans but more interest- regulation. ing with Russians. The Russian car market has become more civilized Tell us about the work of the Association of Eu- and orderly – and this is partially due to the work ropean Businesses in Russia, and in particular the conducted by the Association. This was facilitated automotive division. What are the objectives of by the introduction of performance standards and the organization and what goals it has achieved? dealer networks, and it was an important task for importing companies targeted at developing their The Association of European Businesses in Russia brands in the automotive market. In the mid-90s has been working for a long time and over the past no one knew about the standards for dealer net- few years I have led the Automotive Committee. AEB works or car sales, and customer service was non- is a great organization and there are several other existent. But a few years ago discussions started, at committees along with the automotive one. Auto a governmental level, on the topic of implement- direction is one of the largest in the Association’s ing common standards and rules for the entire car structure and one of the most active, conducting ex- market. Indeed, in the absence of any actual secto- tensive public work. Although it is called the Associa- rial regulation, such standards are essential. This is a tion of European Businesses, it includes non-Europe- complex issue, its complexity lies in the specifics of an companies such as, for example, Mazda and other the car market players, importers and dealers. Japanese, American, Korean and Chinese brands. We found a mutual understanding on this com- The Automotive Committee has been working plex issue. The cornerstone point of all discussions closely with the government in the organization became the question of whether or not to adopt

October-December 2014 CAPITAL IDEAS 37 NOTHING VENTURED

the laws as they are, for example, in Europe, which among motorists. Mazda attracts the attention of would put the car companies in a special position. young buyers. People love Mazda in Russia. This is All participants came to the conclusion that the clearly demonstrated by our growing sales. In Rus- model of self-regulation of the market is, in a given sia, against the background of a declining market, period of development of the market, the best solu- Mazda has not only maintained its position, but it tion. has seen strong growth and demand for our cars is exceeding supply. I emphasize that the uniqueness of the Russian market still lies in the fact that there is meaningful Do you think this is thanks to you personally as dialogue that requires participants to compromise a leader? and take steps to meet each other half way. The existence of such a dialogue, in which the initiative Tough question! My management style gives op- AEB has involved the government, importers and portunity for creativity in my team. We are in con- dealers is a great achievement and a huge step to- stant contact with our Japanese colleagues and wards the orderly and civilized car market. they fully support this approach. The overall credit goes to Mazda because it is treasured as a reliable Do you have a management style that you be- and loyal partner. Trust is the core value of the team lieve to be exclusively your own? in the Mazda Russian office. It’s great to trust the people with whom you work every day. Yes, of course. At Mazda, we consider ourselves to be the best partner in the automobile business. We What is the future of the Mazda brand in Russia? build relationships with our dealers and partners on the principles of openness and flexibility. In Russia, Mazda is still young. We came here rela- tively late compared to other automobile brands. In your opinion, what reviews do Mazdas receive But we are fully committed to the Russian market, from their fans? have ambitious targets, the best cars and the best dealers. Mazda has a great future in the Russian They think we are a little crazy just like them! Our market with growing sales and great engagement brand and our cars are the exact opposite of bore- from our customers. Russian buyers like Mazda, be- dom and formality. Mazda has a bright and dynam- cause these are the cars that create positive emo- ic image, and I am sure that is how it is perceived tions and give a sense of freedom. ■

38 CAPITAL IDEAS October-December 2014 useful info

Chamber of commerce and industry of the Russian Federation Address: 109012 Moscow, St. Ilyinka, 6/1, bldg. 1 PH: +7 (495) 620 00 09 Fax: +7 (495) 620 03 60 http://www.tpprf.ru/en/ Department for Work with Foreign Legal Entities and their Representative Offices Ph: +7 (495) 620 02 14 Fax: +7 (495) 620 01 70 E-mail: [email protected] Ph: +7 (495) 620 02 62, 620 02 21 Fax: +7 (495) 620 01 70 E-mail: [email protected] Moscow Chamber of commerce and industry Address: 38 Sharikopodshipnikovskaya Street, bldg. 1, Moscow, 115088 Ph: +7 (499) 940 33 12 Fax: +7 (495) 675 03 16 E-mail: [email protected] Moscow Investment & Export Promotion Agency Address: 2, Lobachevskogo st., Moscow 119415 Russia Ph: +7 (495) 431 47 78 Fax: +7 (495) 431 47 78 E-mail: [email protected]; http://www.miepa.org/en/ Main Administration for Service to the Diplomatic Corps (GlavUpDK) Address: 20 Prechistinka Street, Moscow, 119034 Ph: +7 (495) 637 31 71 Fax: +7 (495) 637 28 82 E-mail: [email protected] http://www.updk.ru

October-December 2014 CAPITAL IDEAS 39 NOTHING VENTURED Sonosuke Ishii: Management of Hitachi supports business development in Russia According to one famous Russian proverb, "Moscow was not built in a day." But it is more accurate to say, "Moscow never stops building." Today, one can stumble across a site of a new building or renovation project in just about every part of the city. And often, bright orange excavators with the brand name HITACHI inscribed on them can be found on these sites.

HITACHI machinery became more To better explain our perception of the Russian market, you need to at least talk a little bit about the history accessible after the Japanese of Hitachi’s operations in Russia. Our excavators were company opened a plant in used in Russia for the first time in 1978. The experience was a success and sales numbers grew. In 1982, Hitachi Russia. But can we consider such opened a representative office in Moscow.

an investment timely, given the I’d like to point out that Hitachi is not only one of the difficult situation in the Russian oldest companies in existence since 1910, but also a very large company: it includes more than 1,000 economy? This is the question we structures with total staff of more than 300,000 employees worldwide. One of these structures is the asked Sonosuke Ishii, President subsidiary called Hitachi Construction Machinery Co., & CEO of Hitachi Construction Ltd. (HCM), created in 1970, which focuses on the manufacture of construction equipment. Machinery Sales LLC. In 1982, when Hitachi opened an office in Moscow, HCM could not be accredited. The Soviet authorities were of the opinion that, since Hitachi was already present in Russia, establishing a second company was unnecessary. There was no choice but to agree with the parent company to replace of one of the Moscow office employees with a representative from HCM. This problem was only resolved after the collapse of the Soviet Union: Hitachi Construction Machinery Co., Ltd obtained Moscow registration and opened its own office in 1992.

40 CAPITAL IDEAS October-December 2014

NOTHING VENTURED

The story does not end there. In 2010, a subsidiary draulic excavators in late June. To celebrate the oc- of HCM, dubbed Hitachi Construction Machinery casion, we held a ceremony with the participation Eurasia Sales (HCRS), which I represent, was also of the regional governor and the president of HCM. established in Moscow. How many units will the new plant manufac- This emergence of new companies out of one ture, and will they differ from those that are large one resembles a Russian doll in structure. shipped from Japan? You, judging by the company name, are selling HCM products in Russia? The annual capacity of the plant allows for the manu- facture of 2,000 excavators weighing 20-30 tons. This We are indeed responsible for sales and service support is the so-called construction class, but we plan on pro- of Hitachi equipment in Russia and the CIS. But we do ducing as many machines as the market can absorb. We not do what can be described as retail sales. The sales of have not set our target numbers yet, but we plan on do- equipment to end users, along with service and main- ing after we have a product portfolio. The preliminary tenance, is carried out by our official dealer TechStroy- reviews illustrate that customers trust the excavators Contract. This is a purely Russian company that we have manufactured at the Russian plant. In connection with been working with since 1998. It has about a hundred this, we are in the process of tackling another impor- branches across Russia — from Kamchatka to the Baltic tant challenge. We are now able to be more responsive Sea. These are not just offices, but also stocks of spare to customer feedback, to respond more quickly to their parts and repair shops. This enables us to provide our requests. If people need some fine-tuning or have some customers with high quality service. In Moscow, the specific demands regarding an order, we are happy to firm has five or six service centers that fully meet the fulfill such requests. To this end, we always have design service needs for Hitachi machinery. Since our partner engineers from Japan working in the plant. Quality con- has much deeper knowledge of the Russian market trol also remains under the control of representatives and a better understanding of Russian customers, we from the enterprise in Japan. This is not because we do believe this partnership is very valuable to us. The col- not trust Russian machine builders – there are a lot of laboration absolves us of many worries and allows us highly skilled and qualified workers among them. Sim- to focus our efforts on manufacturing, technology, and ply speaking, design and quality control are two critical the development of Japanese technology in accordance areas that we in Japan traditionally pay special attention with the needs of Russian customers. to. We want to be 100% sure that the unit produced in Russia is in no way inferior to Japanese originals, and is To this end, in 2011 we started building a plant in the possibly even of higher quality. Tver region, about 170 kilometers from Moscow. This plant, named Hitachi Construction Machinery Eur- Where are materials and basic components for the pro- asia Manufacturing, shipped the first batch of hy- duction of machines shipped from—Russia or Japan?

42 CAPITAL IDEAS October-December 2014 Currently, only the metal parts come from Russia. The plant purchases steel billets and rolled steel and uses these materials to manufacture frames, booms, coun- terweights — basically, metal and relatively simple products. But, I must add, all of these details have to be trustworthy and of very good quality. The metal is purchased from a major Russian plant (Iron & Steel Works) Severstal ('Severstal-Russian Steel'), which is closest to our plant. We have sent a trial batch of met- al to Japan, and the audit confirmed that the quality of it is not worse, and in some respects even superior to the one that is used in Japanese Hitachi factories.

Basic units and components — engines, hydraulics, pumps, motors, valves, come from Japan. For this rea- son, we cannot significantly reduce the price of the final product: the cost of an excavator assembled in Tver is not very different from the product entirely made in Japan. Small gains are secured only because shipping a new excavator is still more expensive. Basi- cally, we want to include more Russian suppliers in our manufacturing process, but this should not hap- pen at the expense of quality. Competent manufac- turers of components and systems for excavators Hitachi also suffered some losses. But, in some ways, cannot yet be found in Russia, but we do not exclude this experience was helpful. We have seen being able such a possibility for the future. to offer a quality product is not enough to succeed – you need to be closer to customers, to have a clear Is localizing production a priority for Hitachi, as is understanding of what is happening in the economy the case with foreign car manufacturers? and to respond quickly to changing customer require- ments. The result was the formation of our company You know, of course, that their Russian plants oper- and the construction of a new plant. ate as industrial assembly plants. This means that they can bypass import taxes for their components When, approximately, will the plant start turning if a certain proportion of the materials and parts are in profits? locally produced. Hence, there companies strive to gradually increase local production. We do not belong When deciding on investments, our management, of to this category, so we import components in accor- course, considered the proposed business plan, which dance with general customs and tax laws. But, as I provides for profitable production by a certain date. said earlier, we're not opposed to transferring more Exactly when this will happen factually is a fine ques- production to Russia. Today, component localization tion. A lot of it depends on the market. Now that the at our Tver plan amounts to 10%. We want to increase Russian economy has slowed down our projections this figure to 20% in the future, although, of course, obviously have to be revised. no such specific task exists. Why is the factory located in Tver, when your com- How do shareholders and top managers of Hitachi pany is in Moscow, where the bulk of problems is evaluate your work in the Russian market? solved by the dealer?

I cannot refer to any verbal assessment, but I do know We have been working in Moscow for over 30 years, that our government supports the development of and during that time we have developed numerous re- business in Russia and considers this market very lationships that require continuous support. In particu- promising. The mere presence of our company in Mos- lar, we need to constantly communicate with our key cow and the establishment of a factory in Tver serve as partner, and their head office is also located in Moscow. testament to this fact. The construction of an industrial Yes, our industrial site is remote. But that's because ac- enterprise is a major investment that requires very se- commodating shops and auxiliary industries requires a rious consideration and approval at the highest level. lot of space. Also, we needed to have a reserve of va- cant land: over time we will likely need to expand the We all had to go through a difficult period due to the production area and build a second part of the plant to effects of the global economic crisis of 2008-2009. increase production volumes. I cannot imagine how a

October-December 2014 CAPITAL IDEAS 43 NOTHING VENTURED

Greenfield industrial project could be implemented in sian market use our newest technology, especially in Moscow: it is crowded and too expensive. regard to the hydraulic system.

How many Hitachi machines operate in Moscow Secondly, the Hitachi machinery allows ours clients today, and what share of the market do you want to achieve the optimum balance of performance and to have in the future? fuel consumption – an advantage that simply must be mentioned. In fact, these two factors are very dif- We only have data on the volume of deliveries, ficult to combine in one machine: either you increase but we do not have the statistics on the number productivity, allowing for increased fuel consumption, of machines currently in operation. From my own or start to save on fuel, but lose in power. We offer experience, I can assume that there are about both: the fuel consumption is lower and productivity 4,000-5,000 Hitachi excavators (which is our main is higher than that of the competition. product) operating in Moscow and the Moscow re- gion. It’s rather hard to say, because customers be- Finally, the third advantage is service and reliability. have differently. Some of them exploit the technol- Hitachi machinery is a real survivor compared to oth- ogy very intensively and seek to continually update er machines. their fleet. Others, by contrast, continue to use the same excavator for as long as possible, despite the Therefore, we argue our excavators have a unique set fact that this requires replacing parts and increases of qualities. Although competitors are also trying to service costs. I have seen a lot of Hitachi excavators keep up, we want to always be one step ahead, and so in operation that were manufactured 12 or more far we’ve been successful. years ago. Of course, it’s more profitable for our company to update faster. But I will not lie, it's nice It would be interesting to hear an assessment of the to see such an attachment to our technology and business environment in which you have to work, hear the great reviews about how reliable our ma- because you have lived in Moscow since the opening chines are, even if they have been in operation for a of the company in 2010! long time and need to be serviced. If the customer is satisfied, then it is a good sign for us. Yes, but this is my third assignment in Moscow. Al- together, I have been here 18 years. Difficult times As for market share, again, I can only refer to our own came after the collapse of the USSR. But now Mos- estimates. Today, Hitachi excavators occupy 20-25% cow is developing very rapidly, and there are no bar- of the Moscow market, and in the future we hope riers in terms of doing business here. In any case, to stay at about 25%, which for us would still mean nothing interferes with our company doing business quantitative growth along with a general growth of here. Bureaucracy? That is everywhere, including Ja- the market. It would be nice to have more, but com- pan, which you Russians may think is a more suitable petitors are not idle either. place for doing business.

Competition in this market is really strong. What Although the Japanese have a reputation for being can you tell us about the advantages of Hitachi ma- the world's largest workaholics, you have some free chinery? time, surely? How do you spend it?

First of all, we do not operate like a department My wife is very fond of classical music, and I hardly store, where there is every kind of product. Unlike need to explain the possibilities in this regard that you other manufacturers, who tend to have the widest get in Moscow. We go to concerts, attend the opera, possible coverage and offer a full line of vehicles, we ballet and drama theatres. There are so many of them have more specialization. For example, we do not in Moscow. I have been actively engaged in sports. manufacture bulldozers, but in regard to hydrau- lic excavators, even among Japanese manufactur- What kind do you prefer? Probably martial arts? ers, our company is unique. Hitachi created Japan's first hydraulic excavator based on its own research How did you guess? & development, of which we are very proud, and all subsequent models were also made on the basis of You're from Japan! our own research and development. The company is constantly allocating funds for these purposes. In- I was just doing aikido. And although my coach is vestments in R & D amount to 2-3% of the company’s Russian, he has very high qualifications. I have a lot total turnover. So we are not just a manufacturer, to learn from him. A lot of Russian fans of Japanese but also the owner of the technology of hydraulic ex- martial arts practice with me. Socializing with them is cavators. The machines that we supply for the Rus- a great pleasure, and I really feel at home. ■

44 CAPITAL IDEAS October-December 2014 October-December 2014 CAPITAL IDEAS 45 NOTHING VENTURED Peter Vullinghs: A leader in Russia must be strong! Peter Vullinghs, CEO of Philips in Russia and CIS countries, shared with readers of Capital Ideas his observations about the changes in the country which he has seen in recent years, his secrets of business success, declared his affection for Russian people and explained why he loves living in Moscow.

Philips is a company known for its innovation. What company and their innovation resulted in reliability are the company's most relevant and innovative and quality, we have installed Philips at Vegas 1 almost products that you are promoting on the market? 5 years ago and there was no incidence of malfunc- tion ever since." Such recognition is extremely pleas- Innovation and Philips - these are two things that had ant, and we are ready to keep developing meaningful gone hand in hand throughout company history and innovations that help people in many areas of their recently we even changed the company's tagline to lives. "Innovation and you." We spend around eight percent of company sales on scientific research which is a very Among latest healthcare innovations we offer hi-end big amount. equipment for ultrasound diagnostics – the new- est solution Epiq. Its image quality is equal to that of If you look at the whole company’s business, it is di- computed tomography and MRI, but it does not cre- vided into three main parts: lighting, healthcare and ate radiation exposure and therefore is completely consumer lifestyle products. If we talk about Philips harmless for patients. First and foremost, it will be Lighting, today we are witnessing a massive shift from in demand in hepatology, cardiology and women's traditional light sources to LED. For the consumer, this health. transition creates an opportunity to buy smart LED lamps, which can be easily controlled via smartphone What is the company's development strategy in to adjust lighting in your apartment. Another example Russia and globally? is the LED-based light alarm clock that will wake you in the morning by simulating natural sunrise. The mission of our company is to improve people's lives through meaningful innovation, and this prin- In professional segment for dynamic architectural ciple determines our strategy. lighting, we developed LED flexible strands Color Ki- netics featuring 16 million colors. This is the most fa- Philips is one of those global companies where the mous brand of LED lighting in the world. The latest voices of different markets are highly influential and generation of Color Kinetics solutions was used to they are considered at headquarters. We have been decorate Russia's largest media façade, on the new in Russia for 115 years. We care for local consumers’ shopping mall VEGAS Crocus City. I was very pleased opinions and offer products which fit their needs. to hear Mr. Agalarov saying: "Philips is an innovative Overall, countries with developing economies (includ-

October-December 2014 CAPITAL IDEAS 47 NOTHING VENTURED

ing Russia) today generate 37% of company revenue, green products, but this is not equally important for so we will definitely count on them when determining Russians. a business strategy. Today Russia is among the top 10 strategic markets for Philips and we look forward to What are Philips’ marketing strategies in Russia expanding our footprint. and how do they differ from those is Europe?

Are there any special characteristics of the Russian Consumer behavior in various countries is reflected in market, apart from certain technical backward- marketing policy. All of our marketing and advertising ness? campaigns implemented in Russia were adapted to the market. As a global player, we are testing interna- First of all, I want to note that the Russian science and tional campaigns at the local market but usually the technology base is very strong. I am absolutely certain strategies that are successful in other markets can- that in collaboration with international researchers not be implemented in Russia. For Russians, as I said, and business representatives, Russia will be able to most important is the material of the product, its de- learn how to develop almost any technology. sign, consumer characteristics, power, performance and... innovative approach. I will answer the first part of the question with an example of consumer lifestyle products. As with any In terms of communication channels to interact with international company that is not in its home mar- the consumer audience in Russia, the most popular ket, we do not always understand what Russians are media is still television. However, digital media show- interested in and what they are ready to buy. There- ing constant growth and we should use new types of fore, when I came to Russia 5 years ago, I visited or- media if we want to be successful in the market and dinary households twice a month. I watched people speak the same language with our consumers. Our and learned a lot. I often say that there are 140 million B2B communication tactics are interaction with opin- engineers living in Russia. They always wonder "why ion leaders through participation in marketing ac- should I buy it?" vs. "what should I buy?" In addition, tivities, industry events and communication through design is very important for Russians. The materi- general media. als of consumer electronics products are even more important. Here consumers do not like glossy plastic Are there some business indicators which you want because they think that it looks cheap. Instead they to go beyond in the next few years? prefer matte. Device better be made of steel and look powerful and reliable. Of course, we have clearly defined objectives. For ex- ample, by 2016 we want to increase sales by four to Another trait - in Europe people tend to be very en- six percent. And in terms of operating profit (EBITDA) vironmentally friendly and pay a lot of attention to we set a more ambitious goal - an increase by 11-12%.

48 CAPITAL IDEAS October-December 2014 Today, we are acting in accordance with the strategic principle does not work. It is important to under- program "Accelerate!" and it is positioned for a sus- stand that when you work in a market like this, it is tainable growth of sales and company’s profitability. necessary to take into account the needs of these A significant part of this process is innovative devel- people, their culture, way of life, traditions and to opment because it allows company to achieve higher understand how they live and what they expect margins. The third part of the program is the control from your product. Adaptation of the product port- of the operational costs. There is a term "non-produc- folio for the local market is key to the company's tion costs” and now we aim to optimize them to im- success. prove the overall EBITDA performance. If we are talking about my personal secrets to suc- You have already been living and working in Russia cess, I can say that coming to a new country you for more than five years. What do you like about should understand its culture of communication. As the country, Moscow, and Russians? a top manager in Russia, I have to be more frank and straightforward. If I don't like something, then I love Russia and I love living in Moscow. It's never I need to say something immediately, otherwise si- boring here and there is always something going on. I lence is perceived as weakness. A leader in Russia love classical music, and Moscow offers lots of oppor- must be strong and outspoken. In Asia, it is impos- tunities to enjoy the best-in-class music. I confess, I sible to be quite straightforward with your subordi- love good food and I think that the Russian capital has nates as they start feeling extremely uncomfortable just fantastic level of service at restaurants compared to be criticized, especially in public, and nothing to America or Europe. good will happen. In the Netherlands, for example, the entire organization must unanimously agree If we are talking about Russians, I love them very with the decision to get it passed. And even if one much and I can explain why. First of all, they are real. person is against it, everyone will start a new round When you ask, "How are you?" They answer honestly, begin to negotiate. "OK" or “Normalno” and this way they are different from Americans or Europeans saying, "Great”, “Awe- What is your advice to expats who are just starting some”, “Super!" I can see high intellectual and cultural to work in Russia? level of Russians and these combined make them very interesting and attractive companions. Come here with an open mind, pure thoughts and do not listen to other people: everyone has a sub- What are your secrets for success? jective view of Russia, and most of the "advisors" have never been here. You need to come here your- The secret to success in business is simple. There self to see everything. Living in this country can be is an expression "one size fits all." In Russia, this a huge pleasure! ■

October-December 2014 CAPITAL IDEAS 49 NOTHING VENTURED Yoshiaki Ichimura Fun to Live – Fun to Drive

Today, Yoshiaki Ichimura is the Subaru cars have a special status in our country. A community of brand enthusiasts who not only love head of Subaru Motor LLC, the their Subaru, but also know a lot about these cars distributor of Subaru cars in Russia has formed around the brand. Besides the Russian market itself, despite its current condition, which is and Belarus. He started working as characterized by slower growth, remains one of the most dynamic markets in the world. Two years ago, CEO of the company in August of when Ichimura-san has received an offer to head the 2013. In total, he has more than 30 Russian office of Subaru, he considered this proposal a very fortunate opportunity to broaden his pro- years of experience in the automotive fessional experience. "Working here, as well as the move to Moscow, became a challenge for me," says industry. Before moving to Moscow Ichimura-san. in the past year, he has lived and Ichimura-san, tell us what it was like to meet the worked in Malaysia, the Philippines Russian capital for the first time?

and Thailand where he also ran a The first time I came to Russia was in winter. And car company. Ichimura-san talked I can say that I still find it hard to get used to this time of year, as well as other features of the Rus- about his life and work in the Russian sian climate. On my first meeting with Moscow, it seemed to me like a very tight city. But, after mov- capital in an interview with Capital ing here permanently, which was in the summer, Ideas. I realized that Moscow is enormous. And that it is incredibly beautiful. I compare Moscow with other metropolitan areas around the world where I had to live, and I understand that this city like no else. Before coming here I had my own ideas about Rus- sia, but it turned out that they were different from what I saw here. With such a contrast to what I saw I was not disappointed. On the contrary: for exam- ple, I had no idea about how friendly Russians can be. You know, in a year of work in Russia, I visited many different cities, and was met with hospitality and kindness. It amazes me and how diverse Russia can be. The country is a mix of different cultures, nationalities and traditions. Being here, I feel the power of this country. I am sure that this power and strength will grow many times if the Russians

50 CAPITAL IDEAS October-December 2014

NOTHING VENTURED

could train themselves to codify and organize af- Ichimura-san, tell us about the difficulties you en- fairs in business. Many companies who have come countered in the first year of life in Moscow! to work in the Russian market found necessary to adapt to local conditions and circumstances. In my For example, public transport in Moscow: it is particu- opinion, the Russian people have already adopted larly difficult for foreigners who have poor command the good point of the international global experi- of Russian. I'd be happy to go through the city alone, ence and standards and developing accordingly. but I always have to look at the map, because there is no public transport route information in English. Was there anything that amazed you? Therefore, I am finding it very hard to go visit friends on my own. I was struck by the complexity of the Russian lan- guage. I've lived here for one year, and yet have pro- Ichimura-san, what advice can you give to foreign- gressed only slightly in its study. Another surprise ers, and in particular the Japanese, who come to is the large number of cars on the roads, and the live and work in Russia? scale of the traffic jams. I still do not understand some of the features in the culture of driving. It is Mainly, learn Russian; start at least with simple phrases noticeable that the Muscovites prefer big cars, but that will facilitate communication. Talk to the people in many park them along the roads, and this further their own language — and this is important in everyday complicates the already difficult traffic. Another of life and in business. To Russians I would have advised to my observations is that life in Moscow is expensive; learn English, so we would have more opportunities for dinners at a restaurant costs three times more than fruitful dialogue. For a foreigner who’s been to Russia dining in restaurants Malaysia or Thailand. Moscow for a long time, it is also important to know the history, is a very big city, and this size is felt throughout. Un- culture and traditions of this country and to constantly doubtedly, this is one of the most important busi- replenish this knowledge. Without those, understand- ness capitals of the world. However, traffic jams, no ing the Russian people is impossible. In my opinion, it regulated parking system, a peculiar culture of driv- is important not only to understand and see the differ- ing and a chaotic roadwork system impede the pace ences between Russian and other nations, but also to of development of the city. And the resolution of respect these differences, understand them and accept these problems, I am sure, will help grow the busi- them. And more importantly, make friends here and ness in Moscow. find like-minded people.

52 CAPITAL IDEAS October-December 2014 According to your observations, are there differ- How easy is it to you, a Japanese person, to work ences in the organization of business processes in with the Russian team of Subaru Motor? Russia and Japan? If difficulties arise, and they are associated mainly with In my opinion, there is no difference in princi- the language, as well as some aspects of the culture of ple. But there are differences in business culture. relations. Because I haven’t lived in Russia for long yet, Sometimes, such differences surprise me, and I cannot understand all the subtleties of communica- sometimes I can not quite understand them. Why, tion. And so sometimes I have to be careful in talking for example, do you need to prepare additional pa- to my colleagues lest they misunderstand my words pers to sign an agreement, if it is already an agree- and reactions. At the same time, it is my luck that I ment that was reached between the leaders? The work with professionals and very friendly people. And difficulty lies in the fact that it is sometimes dif- it helps me to quickly adapt to my new language en- ficult to understand who is responsible for what, vironment and slightly disorienting business climate. to determine the range of competence of a staff member to communicate with a specific person on Ichimura-san, is there, in your opinion, a particu- specifics of a matter. lar attitude to the Subaru brand in Russia, and how can it be explained? What, in your opinion, are the main features of the car market of Russia? For over 10 years during which the Subaru brand has been officially present on the Russian market, afan Before, I worked for many years in Asia, and the main movement has formed around our cars. "Subaru" difference between those and the Russian car mar- connoisseurs actively support our brand, and it does ket is the popularity of Japanese brands. In Russia, not surprise me. After all Subaru makes cars that the situation is different; the Japanese automotive are especially good for weather and road conditions brands here occupy about 20% of the total car mar- in Russia. Subaru fans appreciate our cars’ advanced ket. Automotive market in Russia differs significantly technology and safety features: in particular, the four- due to its competitive environment. Working here wheel drive, which is irreplacebale in a Russian winter. is more complicated, since the market has a huge number of players, where everyone is fighting for What about Subaru cars indicates that they belong every percentage of sales. to the Japanese culture?

October-December 2014 CAPITAL IDEAS 53 NOTHING VENTURED

In my opinion, Subaru cars embody the main features Ichimura-san, what plans do you have for the de- of the Japanese nation, such as the stability and care for velopment of the Subaru brand in Russia? the owner’s safety and the safety of their family. We are constantly working on these characteristics; we strive One of the main objectives is increasing the pres- to perfect not only the technical parameters of the vehi- ence of Subaru cars in Russia. Our medium-term cles, but also their level of security. I want to emphasize development plan for the Russian market provides that safety is one of the main values of Subaru. And this for an increase in sales to 30,000 units of cars per opinion is shared by, for example, North American mo- year by 2018. According to our forecasts, this year, torists. This directly affects the performance Subaru in Subaru will sell 17 000 cars in Russia. My goals in- the United States. We register an annual increase in car clude strengthening and qualitative growth of the sales there, now half of all Subaru cars sold in the world dealer network. I expect to attract a new gener- are sold on the US marker. I hope that our brand will be ation of young motorists to our brand. The main able to instil the idea of stability and security, which lay goal for our company is to get more people to ap- the basis for Subaru cars, in Russian users as well. preciate the benefits of our cars and make their choice in favour of Subaru. Due to their popular- What are the expectations of Russian car owners ity, they will become more affordable in terms of towards Subaru cars? price and cost of operation. As I mentioned earlier, consumers in Russia have their own tastes and According to my observations, Russian motorists have preferences, and so my main goal and the concern become more demanding. Their desires have changed of each employee of the Russian office of Subaru a lot. In the past, owning a car was a sign of status, is to lobby for the interests of Russian buyers at but now more and more people are interested in the the level of the manufacturer. Also, I would like to features of the device and the operation of vehicle. share the experience that I was able to accumulate And many are now making their choice in regard to a though many years in other markets. I am sure that car is based on that knowledge. In terms of technol- this experience will help improve the efficiency of ogy Subaru offers motorists the most advanced solu- all business processes of our company. In my view, tions that reflect the characteristics embodied in our the contribution of Subaru to the lives of our cus- slogan, «fun to drive». We try to compete on an emo- tomers is that by bringing a sense of drive, positive tional level; it allows us to create vehicles with unique emotions and joy, which are offered by Subaru cars, qualities and abilities. we make them better. ■

54 CAPITAL IDEAS October-December 2014 BEAUTY SPOT

October-December 2014 CAPITAL IDEAS 55 The bright colorful future described by twentieth-century Russian science fiction has not NOTHING VENTURED materialized. However, one part of it—electric cars, can already be seen zipping through the streets of Moscow. The prospects for electric cars are on the upswing as fossil fuels (gasoline, diesel oil, and gas) will not last for very long, and the price for them continues to increase. Furthermore, the electric car is the ideal mode of transportation for urban life; it is economical, environmentally friendly, and quiet. However, at the moment, it still has a number of drawbacks.

Full Tank of Electricity

In the Dust of Centuries sand. The most used model is the Mitsubishi iMiEV. The domestic model, EL-LADA, is used mostly in Kras- The first electric car appeared in Russia exactly 115 (!) nodar Krai where, with the support of the Administra- years ago, earlier than the gas-fueled internal com- tion of Territory, a large-scale experiment was con- bustion engine vehicle. The first electric car was de- ducted where the EL-LADA was used as a taxi. This signed by the Russian nobleman and engineer-inven- car is a completely domestic product, but the main tor Ippolit Romanov. It was the first Russian electric electrical components are produced abroad. The elec- omnibus and it could seat 17 passengers. The vehicle tric motor, the control unit, and the unit "generator" weighed about 750 pounds, of which 350 was just the are all produced by the Swiss company MES. The bat- weight of the battery. A single charge could last for 60 teries are shipped in from China. Let's hope that over kilometers, which in those days was quite a lot, and time, the share of domestically produced components the maximum speed was an outrageous 39 km/h. His- will grow and will reach 100 percent. All the necessary torians say that the design even included a regenera- prerequisites are in place to make that happen. tive braking system to save battery power. As you can see, the inventor was far ahead of his time. However, In addition, the market has officially certified (in do- Romanov could not find the necessary investment mestic refining) the Chinese electric E-Car GD04B. and the project stalled. Also, of course, we cannot forget about superstars like the electric sports car, the Tesla Model S. According Today, 115 years later, the number of electric vehicles to traffic police, as of August 2014, in Moscow alone on Moscow's roadways has increased by very little; there are more than 80 Teslas. The leading model the total number does not exceed a couple of thou- accelerates to 100 km/h in 4.2 seconds. Its powerful

56 CAPITAL IDEAS October-December 2014 lithium-ion battery car can travel 420 km after one taxes. There are also government subsidies for the charge. Also some good news for fans of innovation purchase of electric cars, organized free travel on toll and electric power in early August, on Leningrad high- roads, and even authorization to travel on lanes dedi- way, "Ekomotors" opened its first electric car dealer- cated to public transport. The German government ship in Moscow, which sells the Tesla Model S in vari- has gone furthest of all; it reimburses up to 80 per- ous trim levels. cent of the cost of the electric vehicle.

The Renault-Nissan alliance has an extensive range of The second factor, the importance of which is now di- passenger and commercial electric vehicles: the all- minishing, is the short range a car can travel on a single electric Zoe, the compact Twizy, the KangooZ.E van, charge. Most electric cars are now able to drive for 150 and the sedan FluenceZ.E. Unfortunately, due to low kilometers after a single charge. For an urban dweller, demand and high prices, they are not for sale in Russia. that is enough to last 2-3 days, though sometimes if one is out and about with friends, the lack of charging stations can lead to confusion and inconvenience. Elec- Bright Electric Future tric cars can be charged from a conventional wall out- let, but that can take 6 to 10 hours, depending on the The main factor that has hindered the spread of model. There are specialized stations where you can electric vehicles in Russia is price. When an electric "fill up" an electric car for 15-30 minutes. At the mo- car costs as much as an SUV or a luxury sedan, the ment in Moscow, there are about 50 charging stations buyer's choice is obvious. However, not so long ago, for electric vehicles, most of which are located in city taxes on electric cars were dropped (this will be fully centers or shopping and entertainment centers. In late in effect by December 31, 2014). As a result, the price February, the Moscow government signed an agree- of the Mitsubishi iMiEV has fallen from nearly 2 mil- ment with "Mosenergo" which will build charging sta- lion rubles to 999,000 rubles for the base version; tions in the capital. The Department of Transportation this has had a positive effect on sales. However, even plans to start in Moscow this year, setting in city park- with the price of domestic cars approaching one mil- ing lots of special systems for charging electric vehicles. lion rubles, it still seems to many to be an unjustified luxury. The only exception is the model E-Car GD04B An undeniable "plus" for the buyer is the low price (450 thousand), which is manufactured in China by of "fuel." Filling "up one’s tank" at an express refuel- the Shifeng Group and undergoes finalization in ing station costs around 100-140 rubles. According Moscow by the company "Damer." to forecasts by Western experts, by 2020 the electric share of the total number of cars in the world could Electric cars are expensive because of the small pro- reach at least 5-10%. duction volume; as a result, manufacturers cannot reduce the cost of cars to the level of conventional Another important fact is that according to UN projec- smaller cars. However, in many countries, govern- tions, by 2030, the amount of vehicles worldwide will ments are paying serious attention to environmental double, from 800 million to 1.6 billion, which at times impact, and they now incentivize both manufactur- will increase exhaust emissions into the atmosphere ers and consumers to produce and purchase electric and trigger climate change. Therefore, if we want to vehicles, respectively. For example, in some countries, live in a clean world and breathe fresh air, then it's time electric vehicles are not required to pay registration to think about buying an electric car! ■

October-December 2014 CAPITAL IDEAS 57 NOTHING VENTURED

During the Soviet years, stopping by for a glass of mineral water from a vending machine was a pleasant treat for people taking walks in the center of Moscow. Today, these vending machines are once again appearing on the city's streets, and they sell a lot more than just water. Moscow: the specifics of the vending machine market Nikita Khrushchev’s orders

sociological survey conducted among the capital's residents revealed that Muscovites consider vending machines with water and soda to be one of the most prominent symbols of the Soviet era. It is interesting toA note that the world's first “vending machine” also served water. This machine, which sold “holy water,” could be found in the temples of ancient Rome as far back as 215 BC! In Russia, the first vending machine appeared in St. Petersburg in 1898. The simple ma- chine sold chocolate bars from the George Borman confectionary factory for just 15 kopeks a piece. But, for whatever reason, the project did not go any fur- ther than that one single machine at the end of the nineteenth century.

The mass distribution of vending machines in the country began in Moscow after Nikita Khrushchev’s visit to the United States in 1959. Of course, some at- tempts had been made before this date: in 1956, for example, the Perovsky plant in Moscow organized the mass production of vending machines. The rea- son for the organization of the Perovsky line of vend- ing machines was an executive order from the CPSU, which called for the adoption of modern methods of reducing trade costs, including saving money on per- sonnel. Upon his return from the States, Khrushchev gave strict instructions regarding the mass imple- mentation of vending machine trade in the USSR. Al- most instantly, several thousand mineral water and

58 CAPITAL IDEAS October-December 2014 Moscow: the specifics of the vending machine market

soda vending machines were installed in Moscow. no less popular. Such cafes offered visitors a large se- Vending machines with beer and dry wine appeared lection of vending machines. These so-called vending in bars and sunflower oil vending machines were in- machines, however, were a bit different in terms of stalled in supermarkets. During the 1980s Olympic operation. The cafeteria was broken up into sections Games, more than half of Moscow's bars were com- with soups, snacks and main dishes. The visitors would pletely automated. then deposit money into a machine and a correspond- ing section would open, allowing the guest to get his After the vending machines that sold liquids be- or her order. These were separate machines that sold came popular, machines that distributed magazines coffee, hot chocolate, beer, wine and sparkling water. and metro change machines appeared in Russia as Shoe polishing machines that were located in various well. Arcade games were installed in movie theatres, public institutions were also in demand. Users would which many Muscovites remember until this very day. deposit a few coins to jump-start the spinning fur roll- Among the arcade games, the most popular were the ers that would work to clean dirt off their shoes. Two- Morskoi Boi (Sea Battle) game and the claw crane. (By story self-service drycleaners were another peculiar the way, there is a Museum of Soviet Arcade Games in attraction. On the outside, these drycleaners looked Moscow, where visitors can not only look at, but even like giant halls with machines that resembled bulky play, these old arcade games). A lot of people who metal cabinets combines with washing machines. belong to older generations even remember vending Users could dry-clean their pants, suits and sweat- machines that sold cologne: a client had to stick his ers quickly by purchasing a token at a special token necks in front of the cologne jet after dropping a coin window. The client would put the clothes into one of in the machine, making sure to avoid getting cologne the machines, close the door, and deposit the token. in his eyes or hair. Vending machines that sold sand- The client would then sit nearby and patiently wait wiches were no less memorable. These devices had for a green light to come on, which indicated that the sandwiches with sausage or cheese laid out on a shiny dry-cleaning process was complete. But perhaps the metal display. The customer deposited 20 kopeks into most curious automated service invention was the the machine, the tape moved over by one unit, and experimental store called Avtomattorg, which opened the client would happily walk off with the sandwich. in Moscow in the 1960s. The store, which was located By the way, according to Muscovites who remember in the center of the city across from the Lenin Kom- the machines, the quality of the sandwiches, especial- somol Theatre, did not have any personnel at all. In ly in the GUM cafeteria on Red Square, was excellent. this store, which is unusual even by today's standards, all items were sold by “automated vendors.” Accord- Self-serve cafes, where the process of placing and ing to statistics, dairy products were the most popular receiving an order was completely automated, were item in the automated store chain. Different types of

October-December 2014 CAPITAL IDEAS 59 machines sold milk, kefir, ryazhenka, cheese and but- diately adopted by Muscovites. Soviet-style remakes ter. Unfortunately, Avtomattorg was relatively short- are also a niche market in Russia. This market includes lived, in spite of the fact that the vending machine in- vending machines that sell Soviet-style lemonade and dustry developed quite rapidly in the USSR. old school arcade games where the players have to use a metal claw to dig up a toy from the bottom of Chocolate, water and cookies the machine. fter the collapse of the USSR in 1991, almost Promising market all vending machines disappeared from city streets. The hiatus, however, did not last t's not surprising that small businesses account long. Gradually, coffee vending machines, for 40% of the vending machine market in Russia. and then other types of Western vending The advantages are obvious: installing a vending machines,A appeared in Russia: first in Moscow and machine in the office requires minimal documen- then throughout the rest of the country. Even among tation, and no additional personnel is required to today's vending machines, there are certain types that distributeI the food. Foreign vending machine manu- can only be found in Russia. Vending machines that facturers consider Russia to be a promising source for sell sandwiches with red caviar and smoked salmon, investment. For comparison's sake, experts estimate for example, are unique to Moscow. According to data that the Chinese vending machine market will reach provided by the National Vending Association and 4,000,000 units by 2015. The Chinese authorities the European Vending Association, there were about install about 150,000 vending machines annually in 227,000 units of vending equipment operating in Rus- order to support small businesses and local manu- sia as of 2013. Moreover, in Russia, the potential for facturers. In Moscow, vending machine trade, which growth in this industry is estimated to be 1,000,000 was popular during the USSR, only became a part units. A closer look at the vending machine data re- of the retail infrastructure development plan in 2011. veals that there are currently 42,000 coffee machines, Soon after the plan was confirmed, the authorities 160,000 desktop coffee vending machines, 6,000 dismantled a number of street vendor stands and re- vending machines with food and 19,000 vending placed them with vending machines. The experiment machines with snacks operating in Russia. It is also was successful: more Muscovites choose to use vend- worth noting that the number of vending machines ing machines to make small purchases. Russians use is growing rapidly. The vending machine industry in payment terminals frequently as well. Moreover, the Russia has even developed its own national charac- “vending machine” trend is quite apparent in the Mos- teristics. While vending machines that sell coffee and cow metro. A few years have gone by since the return automatic dry-cleaners are particularly popular in the of Soviet-style vending machines that sell newspa- West, such machines do not do as well on the Russian pers and magazines. There are also metro card pay- market. Snack machines that sell chocolate, sparkling ment terminals and even automated photo cabins. water and crackers, on the other hand, were imme- All of these services are in popular demand among Moscow residents and visitors. It is interesting to note that foreign manufacturers currently account for 60% of the total number of vending machines operating in Russia. Coffee and snack machines are imported into the country from Europe and Chinese manufacturers specialize in entertainment machines and machines for children. Domestic manufacturers produce vend- ing machines that sell water and carbonated bever- ages, as well as machines that sell newspapers and magazines. The ability to pay with credit cards and machines that can give back change have increased the popularity of vending machine services. The par- ticipants of the forum called “Vending Russia. Outlook for Small and Medium-Sized Businesses” were opti- mistic about the development of the vending machine business in Russia. According to the experts who at- tended the forum, the number of vending machines in Russia will increase by 50% in 2014. This forecast is quite realistic. In the West, vending machines account for 2% of total product turnover, while in Russia this number hovers around 0.1%. Experts insist that the vending machine market in Russia is one of the most promising in the entire world. ■ For Capital Ideas courtesy of National Geographic Society, Russia

60 CAPITAL IDEAS October-December 2014 BEAUTY SPOT NOTHING VENTURED Andreas Oden We only make shoes with fur for Russia!

The Swedish shoe company What makes Swedish shoe brands better than dif- ferent European brands? Vagabond, which produces stylish and original footwear, has entered the I don’t think that our country of origin is what gives us an advantage; we don’t sell our product as spe- Russian market with a bang. Andreas cifically “Swedish” in nature. A lot of people in Swe- den are not even aware that Vagabond is a Swed- Oden, CEO of Vagabond, spoke ish brand; they genuinely think it is an international with Capital Ideas magazine about brand. It seems to me that Sweden is too small of a country to boast a long-running shoe tradition. Vag- his strategy to develop the brand abond, as an international company, went into oper- ation in 1983, and we are already working in 45 coun- in Russia and what differentiates tries. Our core business is wholesale; that's where Russian and European consumers. we get the main source of our profits. Additionally, in 5 countries (including Russia), we are working ac- tively to develop private retail, which has started to bring us a significant income. Our company has al- ways been profitable, from the very beginning when it opened and continuing now into the present. We have even remained profitable during the difficult

62 CAPITAL IDEAS October-December 2014

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conditions brought on by the global financial crisis. not satisfied with the quality of the leather, which As far as our “Swedish roots,” we do have our own is provided by the supplier, we will not hesitate to design bureau in Sweden. That is the most important change providers. This has given us a reputation as a Scandinavian aspect of our shoes; it is what gives us reliable supplier of fashionable footwear. We have a a unique characteristic. lot to be proud of-- we have the lowest defect rate on the market! What in your opinion makes Vagabond unique? Is there a typical Vagabond customer? Every shoe is unique in its own way and we are no exception. It is important to remember what cus- We have a team of designers who travel the world tomers are looking for and what they like. For them, in search of clothing and accessories. They master- first and foremost, they are looking for shoes that fully transform the information they gather into ideas are stylish, comfortable, made from high quality for our new collections. We pay attention to even the leather and sold for a reasonable price. The name of smallest detail of the shoes. We make sure that our the brand is low on their list of priorities. For most shoes are always perfectly fitted to the foot in terms customers, what matters the most are: the level of of how it will look and how it will be worn. With re- service, speed/convenience of purchasing, and re- gard to our customers, we focus on young women pair services. Europeans are different from Russians aged 18-35 who know fashion, appreciate quality, and in that they do not pay special attention to labels love beautiful shoes. There are lots of young women like “Made in Italy” etc. They are also worried about like this in Russia, which is probably why our shoes are price vs quality; they want shoes of the highest pos- so popular and our sales grow each year there. Eighty sible quality for the most reasonable price. They are percent of our shoes purchases are for women’s not willing to pay the extra money just for a brand. shoes. Another twenty percent are men’s shoes. To be Therefore, to make our shoes the most attractive, we honest though, I on principle do not limit the image of strictly control the quality of our footwear produc- our target audience. This is so we do not narrow our tion at the factories in Vietnam. To do this, we have scope. That’s just bad for business! employees stationed there who constantly work to supervise all stages of the production process and Is there a difference in the preferences of European the quality of the raw materials being used. If we are consumers and Russian?

64 CAPITAL IDEAS October-December 2014 Of course. Different markets have their own culture, do in other markets. However, it all depends on the tastes, and other characteristics. In the past, there preferences of consumers. For one person it might were quite large differences in our collections across be more convenient to buy shoes online. For another different markets. However, lately the differences in person, it is important to come to the store, to try the consumer preferences have begun to fade, and the shoes on, and select a number of pairs from the most same products became bestsellers in different coun- beautiful collection. If a woman decides to buy shoes tries. This suggests that globalization in the world online, then she needs to have a good customer ex- shoe market has had a great effect; buyers are be- perience. The process of purchasing should be easy ginning to think in terms of global trends. As a result, and simple. If she buys them at a regular store, we we are now focusing on commonalities as we try to must also ensure her maximum customer service. For identify and satisfy customer demand. example, if the store does not have the right size or model, the store should do a special order and have When it comes to Russia, specifically Russian girls, we the shoes delivered to the customer’s home. make shoes with fur! With your weather conditions, you need warm shoes. However, we believe that the What do you think of the Russian market? use of real fur for shoes is dangerous and unhygien- ic, so we use only artificial fur. It provides almost as Our main market is Germany, but sales in Russia are much warmth as natural fur, is less subject to wear increasing every year. I am sure that very soon Russia and tear, and lasts longer. And it retains its great ap- will become a major market for us, and we are doing pearance even after long periods of wear. everything we can on our part to make that happen. This is a country full of lovely people with great taste, Do you have a strategy to develop the brand in who are well versed in fashion and trends. I love the Russia? fact that they are pleased with our shoes. I want them to bring joy to customers. Some Western business- During the last 10 years in Russia, our shoes sold in sin- men are nervous about working in the Russian mar- gle-brand stores and through our wholesalers. Now, ket; they think it’s too volatile and unpredictable, but the number of our single-brand stores has increased if you offer a quality product, it will always be appreci- significantly. We continue to develop the wholesale ated and in demand! That is definitely true for Russia. business, and now have begun selling online, as we We have big plans for the Russian market! ■

October-December 2014 CAPITAL IDEAS 65 TRAVEL

Unique garden in the center of Moscow A house on medical wheels There are different types of gardens: Nowadays, the prototype of the first state pharma- flower gardens and vegetable cy in Russia is considered to be the so-called “Phar- macy Cabin," which was opened in 1581 on the orders gardens. In Moscow, not far from of Ivan the Terrible. Later, the authorities established a special Pharmacy Order, which served as the ana- Prospect Mira metro station, there is logue to the modern Ministry. The chief task of this institutional body was to control the seasonal harvest an unusual garden that is markedly of medicinal plants in different parts of the country and their regular deliveries to Moscow. Before the different from typical gardens. It was Pharmacy Order was established, the preparation of medicinal plants was performed almost exclusively founded in 1706 and its first director by monks, since everything related to medicine was considered to be a from of sorcery in the Middle Ages. was the famous German medical Thus, special herbs were grown in monastery gardens along with vegetables and berries. However, after doctor Traugott Gerber. the establishment of the Pharmacy Order, specialists were assigned by the state to harvest medicinal herbs starting in 1630. They travelled to the regions in order to harvest medicinal herbs under the supervision of

66 CAPITAL IDEAS October-December 2014 Unique garden in the center of Moscow the local governor. Each region in the country special- cow long before Peter the Great's garden. The old- ized in growing a specific list of medicinal herbs. Juni- est known pharmaceutical garden dates back to the per berries were harvested in , lady's thumb middle of the 16th century. It was located on the ter- was shipped in from Kazan and Voronezh and Saratov ritory of what is not called the Alexander Garden be- specialized in liquorice. Over time, the authorities in tween the Troitskaya and Borovitskaya Towers of the Moscow decided it would be more cost-effective to . During the 17th century, during the grow medicinal herbs directly in the capital. rule of Alexis of Russia, a total of four pharmaceutical gardens existed in Moscow: one was located near the walls of the Kremlin, one in the German settlement, Plantation by the Kremlin walls one near the Myasnitskaya gates and one in Kitay- Gorod. Unfortunately, none of these gardens, aside The majority of official sources state that the first from the Pharmacy Order building, have been pre- pharmaceutical garden was established in Moscow served. Nowadays, anybody can come by to visit the on the orders of Peter the Great in 1706. According old mansion, which is located at Starovagankovsky to the legend, Peter the Great himself planted three Pereulok. It was only in 1706 that the first Botanical trees in the garden after it opened: a spruce tree, a fir Garden, created by Peter the Great in the image of tree and a larch tree. The employees of the pharma- botanical gardens in Europe, replaced the pharma- ceutical garden, which still exists today, all insist that ceutical garden near the Kremlin walls. The garden the legendary larch tree planted by Peter the Great is was located behind the Sukharev tower of the leg- still part of the garden. At the same time, historians endary James Bruce – a mystic, statesman and close know that pharmaceutical gardens existed in Mos- friend of the emperor. TRAVEL

Friedrich - Christian Stephen Georg Franz Hoffmann

Under the shadow of science called Flora of Moscow that featured descriptions of 860 different types of medicinal plants with details on From the very first days of its existence, specially invited each plant type's location, blooming period and optimal eminent European botanists took care of the Botanical harvesting time. During F.C. Stephan's management, the Garden. Their duties included taking care of the plants garden was transferred from the Pharmaceutical Order and herbs, as well as teaching Russian doctors and stu- to the Medical Surgical Academy. After just nine years, it dents medicine preparation techniques. A multitude of was sold for 11,000 rubles to Moscow State University in dated pharmaceutical vials, discovered by scientists on 1805. The German professor of botany from University the territory of the garden, serve as evidence of this fact. of Gottingen became the new director of the garden. He The first director and, essentially, the founder of the became famous because he gave the order to create the pharmaceutical garden was Traugott Gerber, a famous general layout of the garden, which has remained until German doctor of medicine and botany from Leipzig University. Today, his name is immortalized in one of the South African perennials, which is named after Gerber. A German gardener and his apprentice helped the sci- entist in the creation of the Botanical Garden. 15 Rus- sian scientists and six of their students worked in the pharmaceutical garden as well. It is worth noting that Traugott Gerber, aside from creating one of the best botanical gardens in Europe during his stay in Moscow, contributed to the publication of the first directory of Moscow Flora in 1736. Among other plants, the direc- tory included a great deal of medicinal herbs in Russia. Several medical and botanical expeditions were orga- nized under Gerber's leadership. Their primary goal was to create a herbarium of herbs, roots and seeds of wild medicinal plants in order to grow then at the pharma- ceutical garden in Moscow.

It should also be noted that the Botanical Garden had excellent directors throughout its entire existence. No matter who was in charge of the garden – the Pharma- ceutical Order, the Moscow Hospital, the Medical Surgi- cal Academy or Moscow State University – it was always headed by prominent botanists with international repu- tations. One of them was the doctor of medicine and philosophy of law Friedrich Christian Stephan, who was the head of the Moscow Botanical Garden and taught at the Medical Surgical Academy. In 1792, Stephan, like his predecessor, released the comprehensive monograph

68 CAPITAL IDEAS October-December 2014 today, in 1807. He also published the first catalogue of est center of botanical research in the country. In the the garden's plants. At that point, a total of 3528 unique pre-war Master Plan for the reconstruction of Moscow, plants grew in the garden's open fields and greenhouses. city planners even wanted to create a monumental en- trance to the MSU Botanical Garden, similar to the one Unfortunately, the Botanical Garden of Moscow State at VDNKh. The authorities also wanted to widen the University was badly damaged during the Moscow fire garden's territory, creating a look that was more appro- of 1812. The fire completely burnt down most of the priate for its status as the state garden. Unfortunately, greenhouses, a library and a rare collection of herbarium the ambitious plans for the reconstruction of the MSU specimens. Only the building that housed a lot of the Botanical Garden were erased completely by the Great directors survived, along with the majority of rare trees Patriotic War, leaving it a small but bright oasis amid that grew in its courtyard. After the Patriotic War of 1812, the concrete jungle of Moscow. In 1952, a metro station the MSU Botanical Garden was not restored for a long called Botanicheskiy Sad opened next to the garden and time due to a lack of funds. It was not until the 1850s, was later renamed Prospect Mira. In the post-war years, over 35 years after the fire, that the authorities started over 200,000 people visited the popular MSU Botanical to slowly rebuild the MSU Botanical Garden. However, Garden every year. Tours, lectures and thematic exhibi- this seemingly favorable process was accompanied by tions were held at the Botanical Garden for scientists, a great loss, as the Garden no longer functioned as a students and the general public. scientific and educational center. The garden became a classic Moscow park for recreation and walks. English- style benches, arbors and even sofas were installed on From seminars to weddings the territory of the park. Decorative flowers appeared on the flowerbeds, which had little to do with botany or Nowadays, the MSU Botanical Garden is called the medicine. Fortunately, the authorities soon realized that Apothecary Garden. Its new name combines the two this was a mistake and the garden once again became main qualities that the garden retained throughout its the country's center for the study of botany. 300-year history. Today, as in the times of Peter the Great, it is located where the Sukharev tower used to be: on Prospect Mira, near the ring line station that bears A Dark Period the same name. Several thousand rare plants are grown on its territory. Some of them are grown in the open After the revolution of 1917, the Garden entered an- and others are grown in greenhouses. A unique palm other dark period. In spite of the fact that neither the greenhouse is open to the public. The garden also hous- garden nor its workers had anything to do with politics, es an exposition of tropical plants, landscape exhibition it was a difficult time for the establishment. Until the aquariums and desert plants, as well as a sub-tropical early 30's, not a single penny was allocated for the MSU greenhouse. According to the unanimous consensus of Botanical Garden. During the famine of the Civil War, the “Apothecary Garden” Botanical Garden of Moscow citizens grew vegetables on the garden's flowerbeds State University scientists, the garden is among some of alongside of the rare plants. Even the wooden fence the best botanical gardens in the world – same as it was was dismantled for firewood. Greenhouse plants were centuries ago. Its territory houses trees that are 250- severely damaged: they grew without protection from 300 years old. In June 2014, the garden was awarded a glass, flooded by rain and sleet, until 1924. The only place “Best in Moscow” certificate for the third time. Informa- botanical research carried on was in the garden's labo- tive educational tours for students frequently take place ratory. Among other activates, researchers frequently at the Apothecary Garden, along with seminars for pro- conducted experiments on increasing crop yields, which fessional botanists and amateur gardeners. The garden was extremely important for the country. Gradually, even hosts wedding ceremonies! ■ the garden was revived, once again becoming the larg- For Capital Ideas courtesy of National Geographic Society, Russia around the world Since the beginning of 2013 Capital Ideas has been successfully presented at Destination Moscow roadshows held in London, Frankfurt, Tokyo, Boston, New York and many other cities around the world

Dear Ladies and Gentlemen! We hope that you like Capital Ideas. Please give us your feedback and send us your comments. This will all help to make Moscow a better place to work and live. Sergo Kukhianidze, Editor in Chief

Write to Sergo Kukhianidze at [email protected] BEAUTY SPOT BOOKSHELF

Teri Lindeberg, founder and CEO of Staffwell, is a remarkable woman. She knows all the ins and outs of doing business in Russia. She is the author of a great book titled Making Perfect, which is about what employees want from their employers. The book contains over 900 tips on how companies can improve their businesses based on employee ideas and feedback. Here's an excerpt from the Teri’s book. Making perfect What can you say about communications within the company/ your department? Building and maintaining good communications is very important for our success. This, I found out, was a great question as it really pin-pointed where we are strong and who was strong in communications, and where we had opportunities for improvement.

Accounting department Finance recruitment division

“Accounting department is OK and very friendly and we rotate if “Finance is not great”…”The finance sector team is screwed up and plus someone is absent. They work for the sales team and give every op- with Albert we are different people, I am flexible and Albert is odd, portunity to make more money for the company”…”In our department he complains that I do not communicate with him and then he never it is very strong and we understand we need to help the sales team and communicates with me after that, but now he is doing it. I am a real to keep high standards”…”The accounting team is great and we rotate action person and Albert likes to talk too much and I find this annoy- functions” ing, but now all is OK”…”I have the hardest team of people in the office to communicate with and I try to get them to speak together”…”All is This is a small, tight team with a fantastic leader and manager OK but last year there were some changes with Sofiya going to legal. heading it. I love that they understand their bigger role in the People are different, me and Kira are very good and help each other, company in serving the front office team to help improve our but with Kristina it is very different. We have different positions we success. All is well here! work on and interests. For me it is very important to close positions and in the most professional way and with placed candidates. Kristina Employees want: is closed from us but we need people too who can be a team together and get along, but I do not need or want to have lunch together with • To have strong communications within the company her”…”The culture overall is nice but in the finance department there and, in the process, to help the company make more are problems, as I am older I feel this is the problem. Everyone wants to money and maintain high standards of service. succeed so teammates are fighting or in conflict and I do not like con- flicts. Zhanna and Kira only want senior vacancies where I am open to taking all vacancies right now and treating the candidates right. They

72 CAPITAL IDEAS October-December 2014 need to be more positive and enthusiastic. They treat me like a junior and there are problems with splits. They feel all candidates are theirs St. Petersburg branch office (spb) and they never want me to interview candidates after them, but they need to. They work together on projects a lot”…”Zhanna and Asya are “We are very close as we have a smaller office”…”Good and flexible”… good but Kristina is not good as she only communicates with Albert, ”SPB is very good as we are a small, close office”…”No problems as she does not want to communicate with the rest of the team, and she we are all now sitting in one room”…”Great as we are all working in takes candidates and does not answer e-mails sent to her” one room”…”The SPB team is perfect and working perfectly together; regarding Moscow, we hope they love us too” These comments make it very clear that we have issues here. This is a team of extreme, polar personalities but also a solid, There are major benefits to having open plan offices and smaller high-billing team; successful and hardworking. On the BD side, teams/offices: communications can be great in this environment, es- Albert is extremely outgoing and enjoys a bit of drama (and pecially with the right team and leader in place. Moscow loves you too may even encourage it at times). Asya is new, extremely par- ! ticular, a bit serious and structured/systematic. On the Con- sultants’ side, Kira and Zhanna are more intellectual, reserved, Employees want: skeptical and suspicious/cautious, while Kristina is more out- going and flexible. • Easy to navigate, open-planned office spaces in which to communicate better; and We cannot force people to like one another. However, we can • Good communications between offices and to know implement and enforce tighter and more standardized rules and that their other offices know and appreciate them. guidelines for people to work within - particularly in regard to use and allocation of candidates and vacancies, and fee split sce- narios. I made a note to immediately work on this and to review Inter-office communications and update the policies and procedures in our operations manual. “Moscow and SPB offices can be improved, more frequent, we do not We could also move people into different departments, if need- know about events and things going on”…”Sometimes I speak with Di- ed, but I see this as a second to last resort. ana and the Directors from Moscow but sometimes answers take too long (1-2 days)”…”With Moscow I talk to Kira and Alyona but there Employees want: are not a lot of needs, however, once a month a conference call would be great and by recruitment sector”…”No problems in SPB but I feel • To work with people they can communicate well with; distanced from Moscow” • To work with people that are helpful and team-oriented; • To not argue or have conflicts with their colleagues; Based on these comments there clearly is room for improvement here. • To have equality and be treated fairly within the team; I made a note to work on improving communications between the of- • To work with positive and enthusiastic colleagues and fices and, specifically, to include faster response times and scheduled, management; and frequent conference calls between management and recruitment de- • Quick, timely responses to the emails they have sent. partments. It department Employees want (between offices): • Improved and more frequent communication; “It is not great, there is a lack of information” • Faster response to enquiries; • Monthly conference calls between offices and divi- This comment pertains to our former IT Director who did not sions; and document anything on the systems we used before he left the • To feel connected to their other branch offices. company. This left our new IT team with the burden of spending a lot of time not only getting up to speed but in documenting everything as they did so. Fmcg/retail/b2b recruitment This was a mistake of ours and one we will not repeat again. divisions Our new IT team has been documenting everything so that, should anyone new join the team, it will be easier and clearer “Very good, everyone is close in my room and in the company, and for them to get up to speed quickly on our systems. there is fast feedback”…”It is good in the company but some people in the FMCG [Fast Moving Consumer Goods] department are not ac- Employees want: tive communicators, but the atmosphere is very good”…”In the FMCG department James is very open and with very good advice”…”As for • IT systems and procedures to be fully documented and my department, we seem to be one big happy family with James at kept up-to-date at all times. the head of it, it’s all perfect, we are a great team really”…”In my de-

October-December 2014 CAPITAL IDEAS 73 BOOKSHELF

partment James is very useful, like a coach”…”Very good within the department” The company overall

Overall, I think it looks pretty good in this department and the “There were no communications when Adam was here. I feel lucky to be comments came with a free assessment on James and some of your friend to get the communications. My advice to you is to commu- his capabilities and strengths. nicate often to the team, bring back values that are personal to a driv- ing sales business”…”Well organized and democratic”…”The company is Employees want: good but between sectors there are few as there are not on many shared projects”…”Democratic corporate culture, people like to work here and • Close communications and fast feedback; there is open-door management”…”It is good that you are chatting with • Everyone to be active communicators to improve busi- everyone”…”Would help to get to know new people when they start and ness results; I agree with you about having lunches together with people I don’t know • Open management; leadership with good advice; well”…”As for the company, I haven’t been dealing much with the fi- mentorship to offer; and nance recruitment team as they are not very communicative from my • Good teamwork. point of view, and I almost haven’t been discussing anything with you so this chat seems to be a good start”…”Not good, we need to have more team-building and fun times together”…”The company is quite good”… Banking/investment/insurance re- ”It was a good idea to have quarterly updates with Diana”…”High-level, very good”…”When we were bigger not everyone knew the names or cruitment divisions people or their roles. I think everyone should be trained on other recruit- ment sectors, especially to cover for people when they go on holiday”… “Good, all is great and it is easy to talk to everyone, and it is the ”Good”…”I think it is good, but because people are separated by different same within the entire company. Polina does a good job of keeping rooms they are distanced”…”Very comfortable and easy and everyone the sector strong and tight, there is a friend and mentor system helps and gives answers, I communicate more with those who get back in the department”…”The banking department is great”…”I feel no to me fast”…”Good, I have never had any problems with our team” weaknesses, great, and great chemistry. Everyone is in contact and negotiating. Most of my time is spent in banking, but when I need Overall, the responses lead me to believe that our communica- to go outside of that all is OK”…”Good – I have all the info I need tions are pretty good and it was good to hear where our strengths and the senior team shares info. Directors and Consultants should lie. However, there are a few things mentioned that I will follow up share more” on - including my communicating more with the company em- ployees, encouraging shared projects, the team getting to know This department also looks to me as if it is in great shape. each other and new hires better, more fun team-building time to- Once again, the comments contained another good assess- gether, and cross-training in different recruitment sectors. ment of Polina and her success and strengths in running this department. Employees want: • Communications from the President and CEO of the Employees want: company; • Open, democratic-style communication; • Easy communication between colleagues; and • Introductory information on new hires and communi- • Good access to, and sharing of, information, within the cation with them; team and company. • To get to know the people in the company that they do not already know well; • More time to get to know their colleagues and man- Real estate and construction recruit- agement on a social basis; • Open plan offices, ideally; and ment divisions • Fast response to communications.

“Pretty good”…”Everything is perfect now because we are small and we go to client meetings together with Directors” Legal recruitment division

This appears to be another department that is fine with regard “Good, James is good with providing feedback and updates” to communications. I did not find this surprising as James continually strives for per- Employees want: fection and always follows our formal system of working.

• To work in teams, in order to boost their own results Employees want: and provide better service to clients. • Timely feedback and updates.

74 CAPITAL IDEAS October-December 2014 Education in English There are several schools throughout Moscow that provide the highest international level of education with courses taught in English. Many expatriate children, whose parents are employees of foreign companies in Moscow for work, study in these schools. Coursework is conducted according to American and British curricula, and several schools include pre-schools and kindergartens. The majority of schools are located in the western, northwestern, and southwestern regions of Moscow, as that is where the majority of expats live due to the recent construction of many modern elite residential complexes over the last few years.

International School of Moscow

Moscow, Krylatskaya Street 12 The International School of Moscow is an independent, British-run organization, created in 2006 in response to demand from the local international community. Its Tel.: +7 (495) 149 4434 primary goal is to provide excellent education based on the English National Curricu- www.internationalschool.ru lum, where a strong understanding of spoken and written English is guaranteed. The school is managed by the Board of Governors of the British Schools Foundation, is a member of COBIS (Council of British International Schools), and is registered with the Qualification and Curriculum Authority in the United Kingdom. The International School of Moscow is located in two prestigious areas of the city. The ISM Krylatskoe Campus is located in the heart of a protected national park, sur- rounded by athletic facilities. The ISM Rosinka Campus is located in the Rosinka Inter- national Residential Complex, which consists of 360 residential units. All classrooms are large, bright, generously resourced, and equipped with the latest technological education tools. There is an extensive library, two large gyms, and out- door sports areas and playgrounds. On the school grounds, students have access to a swimming pool, a golf course, ski and snowboard slopes, and an ice rink. Students regularly go on field trips that combine education and entertainment. Central to our efforts is creating an environment where pupils can thrive. The curriculum demon- strates a commitment to challenging in equal measure the intellectual, creative and sporting tal- ents of our pupils. – Paul Seedhouse, Headmaster of The International School of Moscow. The school maintains the highest academic standards, and undergoes independent British school inspections every 5 years. Over 400 teachers have sterling professional reputations and work experience in the English National Curriculum.

October-December 2014 CAPITAL IDEAS 75 KNOWLEDGE IS POWER

The English International School Moscow, Zeleny Prospekt, 66-а The International English School accepts children from ages 3 to 17, combining regular school, kindergarten, and pre-school. Moscow, Molodogvardeiskaya, 9 The first campus opened in September 2006 in the calm, quiet region of Novogireevo. Moscow, Prospekt Vernadskogo The campus grew very quickly, all the while gaining recognition and respect. Educa- Tel.: +7 (495) 301-210 tion is based on the English National Curriculum and other top international curricula. Parents of students play an important role in the life of the school, promoting the de- www.englishedmoscow.com velopment of various aspects of a vibrant school community. 12 well-maintained school buses take children to school right from their doors. The school is surrounded by its own beautiful garden, and athletic and sports facilities are located on school grounds. We have a highly qualified teaching staff. Except for our language teachers, all of them are na- tive English speakers. Many of them have extensive experience in teaching at schools in the UK. I shall be delighted to show the school to you. You will see what an exciting center of learning we have at English International School! – David Lowder, Principal of English International School East. All children here learn Russian with qualified Russian instructors. Russian instruction is carried out on two levels: Russian as a foreign language, and Russian for Russian speakers. In September 2014, a third campus opened not far from Leninsky Prospekt, in a presti- gious residential and diplomatic area in the southwest region of Moscow. This school accepts children aged 3 to 11. Christopher FitzGerald, founder and principal of the new school, has 35 years of teaching and management experience in British education- al institutions, both within the United Kingdom and internationally. All instructors passed through a rigorous selection process, and hold British (or equivalent) profes- sional qualifications and international experience. The school maintains the same high standard as its other two campuses, providing the same high-quality British education.

British International School in Moscow Central Administration Office The British International School in Moscow has been around for 20 years already (founded in 1994). Over the past several years, it has consistently proved to be one Tel: +7 495 426 0311, of the top performing international schools, as evidenced by its students’ IB Diploma +7 495 987 4486 results. Children of over 65 different nationalities are studying at the school, ranging in age from 3 to 18. Fax: +7 495 426 3811 The school has several different campuses across the city, divided by grade level. Email: [email protected] The Northern District has School #1, for children aged 3 to 7 (B. Akademicheskaya www.bismoscow.com Street, 24); School #2, for children aged 7 to 11 (Priorova Street, 9); and School #7 for children aged 11 to 16 (Priorova Street, 12a). The Southern District has School #4, for children aged 3 to 11 (Inessa Armand Street, 4a); School #3, for children aged 11 to 18 (Novoyasenevsky Prospekt, 19, building 5); and School #5 for children aged 5 to 17 (Nakhimovsky Prospekt, 35a). Another two campuses are located in the Southwest- ern District (School #9 for children aged 4 to 11, Nakhimovsky Prospekt, 35b) and in the Greater Moscow Region (School #8 for children aged 1.5 to 12, Krasnogorsky Region, Angelovo). Curriculum is based on the general education program of the Russian Federation with elements from the British education curricula, and is taught in English and Rus- sian. Native English teachers deliver high-quality instruction, with the assistance of Russian teachers and assistants. Tatiana Anufrieva has been the General Director of the British International School since its establishment. Under her tutelage, the school administration utilizes the most modern methodological practices. Education in English

76 CAPITAL IDEAS October-December 2014 Education in English Anglo-American School in Moscow Moscow, Beregovaya Street 1 The Anglo-American School in Moscow was founded in 1949. It offers an interna- tional education curriculum, which ensures an excellent foundation in English/Lan- Tel.: +7 (495) 231-4486 guage Arts, mathematics, science, and social studies. In addition to English, foreign www.aas.ru languages such as Russian, French, and Spanish are also taught. The school is accred- ited by the New England Association of Schools and Colleges (NEASC), the Council of International Schools (CIS), and the International Baccalaureate Organization. The Anglo-American School of Moscow has a longstanding tradition of providing a diverse and dynamic learning environment supported by a strong, supportive sense of community. Our focus is on personalized approaches that achieve our mission-directed goal of academic and holistic excellence for all. – Jon P. Zurfluh, Director of the Anglo-American School in Moscow.

Atlantic International School www.atlanticschool.ru The Atlantic International School includes kindergarten, primary, and secondary school for the education of children aged 5 to 19. It School #1 – Dubrovka consists of six campuses, four of which are Moscow, Sharikopodshipnikovskaya Street, 30A located in Moscow and its oblast, with the remaining two in different cities. Mobile: +7 (963) 616-3227, Tel./Fax: +7 (495) 661-8691, +7 (495) 661- 8692 The school offers Cambridge International Email:[email protected] Examinations (CIE) programs, and is part of www.atlanticschool.ru/dubrovka the education community of University of Cambridge, one of the best universities in the world and a leader in international edu- School #2 - Festivalnaya cation. The primary aim of the school is to Moscow, Festivalnaya Street, 7A help students develop confidence in working with ideas and information, responsibility for Mobile: +7 (903) 281-2720, Tel.: +7 (499) 745-6261 oneself, and compassion and respect for oth- E-mail:[email protected] ers. www.atlanticschool.ru/festivalnaya The first Atlantic International School was founded in Moscow in 2009 to meet the ed- ucational needs of the city’s rapidly growing School #3 - Skolkovo international population. Cambridge Univer- Moskovskaya Oblast, Zarechye, Berezovaya Street, 6a sity’s high level of qualification is recognized in over 125 countries. The program is very Mobile: +7 (968) 651-7282, Tel.: +7 (495) 534-9745 flexible, allowing the school to offer a wide E-mail: [email protected] variety of subjects and opportunities for spe- cialization in particular areas. www.atlanticschool.ru/skolkovo

School #4 – Skolkovo Park Moskovskaya Oblast, Skolkovo Park Mobile: +7 (968) 651-7282, Tel./Fax: +7 (495) 534-9745 E-mail: [email protected] www.atlanticschool.ru/skolkovopark

October-December 2014 CAPITAL IDEAS 77 QUALITY TIME

Practically every bookstore has a shelf for books in English. It usually In Shakespeare's consists of textbooks and dictionaries for those studying the language. Language However, Moscow has several bookstores specializing in foreign literature, where even the most censorious readers from abroad can feel at home.

The House of Foreign Books, part of the House of Books chain, is one of the House of Foreign most popular bookstores of foreign literature in Moscow. It's been around since 1936, though bookstores have been situated on Kuznetsky Most since Books the start of the century, sprinkled in between neighboring monasteries. Here there is a great assortment of textbooks and literature, albums of graphic art Kuznetsky Most Street, 18/7 and design, dictionaries, books dedicated to fashion, cooking, photography, (495) 628-20-21 law, economics, and more! Many new books arrive on the same day that they Hours: debut in Europe, and you can also find rare editions and gift publications here. Monday - Friday: 9 am to 9 pm All of the most popular foreign publishers are represented on these shelves: Saturday: 10 am to 9 pm Arrоw, Cambridge, CLE, Collins, Dorling Kindersley, Dover, Express Publishing, Sunday: 10 am to 9pm and others. There are also audio and video materials. The store accepts credit and debit cards, and has a discount club.

Anglia British Bookshop is the city's oldest store specializing in fiction and Anglia British Bookshop non-fiction English literature. There is a vast selection of literature (includ- Vorotnikovsky Pereulok, 6/11 ing works of Russian writers in English), subject literature, guidebooks, and maps. There are textbooks for Russian as a foreign language. (495) 699-77-66 Hours: The bookstore, along with its parent company Dinternal, actively works with Monday - Wednesday, Friday: 10 am – 7 pm foreign language courses under the Trade Committee of the Diplomatic Academy of the Ministry of Foreign Affairs of the Russian Federation. Course Thursday: 10 am – 8 pm instructors regularly participate in lectures and seminars on the latest pro- Saturday: 10 am- 6 pm grams, methods, and strategies for teaching foreign languages. New books Sunday: 11 am – 5 pm arrive frequently. You can also submit individual orders for the delivery of any book, from any British publisher.

Britannia is a chain of bookstores all over Russia. It has operated on the Rus- Britannia sian market of foreign literature since 1995, bringing books from leading Eu- Bolshaya Tatarskaya Street, 7 ropean and American publishers to Russia. It has exclusive distribution rights in Russia for publications from Cambridge University Press, Edinumen, Alma, (495) 786-25-68 Hueber and Hachette. It offers a wide selection of literature in foreign lan- Hours: guages, including fiction (adapted and unadapted), instructional literature, Daily, 9 am to 9 pm additional materials for studying foreign languages, academic and profes- sional literature, mono- and bi-lingual dictionaries, reference books, encyclo- pedias, albums, magazines, and much more. Britannia organizes and runs trade fairs, as well as seminars and trainings with Russian and foreign specialists using innovative methods and strategies. In 2013, Britannia Holding and Cambridge University Press signed an agreement granting Britannia exclusive distribution rights to the publisher's English-lan- guage educational literature in the Russian Federation. This also resulted in the creation of a new subdivision in the bookstore – the Cambridge Resource Cen-

The language of Shakespeare ter. It is located at the same address, but with the phone number (495) 786 25 65.

78 CAPITAL IDEAS October-December 2014 The language of Shakespeare Evrokniga (Eurobook) Established in 1993, Evrokniga has become one of the leading suppliers of Bolshaya Tatarskaya Street, 7, foreign-language educational literature in Russia, and carries fiction as well. Bookbridge Business Center (495) 956-41-33 Hours: Weekdays 9 am to 7 pm

Shakespeare & Co Shakespeare & Co is a bookstore of English literature. It has a wide selection of second-hand books across various genres for reasonable prices. It spe- First Novokuznetsky Pereulok, 5/7 cializes in used paperbacks (thrillers, mysteries, etc.). There is a large section (495) 951-93-60 dedicated to new arrivals. No dictionaries or textbooks. You can sell your own Hours: Mon. – Sat. 11 am to 7 pm, Sun. 12 pm to 6 pm used books for a commission.

Akademkniga is a store for those who are looking for rare gift editions of books, Akademkniga+ are interested in books about art or autobiographies of famous figures, or are lovers of fiction. There is brightly illustrated educational literature for children, Relod Store elementary and middle school students, classic and adapted literature for teens, playbooks for educational development, visual dictionaries, and educa- Bolshaya Dmitrovka, 23/8 tional literature. Overall, there are more than 20,000 titles. You can also order (495) 694 25 44, 692 81 41 books through the store. There is a discount program for regular customers. Hours: Weekdays — 10 am to 8 pm Relod also offers the option to take the online Oxford Quick Placement Test, to Saturday — 11 am to 6 pm assess your readiness for exams issued by the Cambridge Examination Cham- Sunday — closed ber or other international exams, including the Uniform State Exam in English.

Bookhunter Bookhunter specializes in foreign literature, with a wide assortment of edu- cational, fiction, social and political, academic, and reference books. There Krivokolenny Pereulok, 9 is an extensive selection of subject literature and guidebooks. The company (495) 623 03 22, 623 86 56, 623 04 00, 623 works with over two hundred publishers, often hosting language seminars in 92 10, 623 06 40 conjunction with them. It also hosts occasional book fairs. Hours: Daily, 9 am to 9 pm M.I. Rudomino VGBIL Bookstore Nikoloyamskaya Street, 1 The M.I. Rudomino VGBIL Bookstore is located in the hall of the State Library (495) 915 31 00 of Foreign Literature. One kiosk is dedicated to different kinds of educational Hours: 11 am to 7:30 pm, materials, and the second is dedicated to materials about area studies, lit- erature about culture and customs, and translations of books about Russia summer — 11 am to 7 pm, by Russian authors. The literature is closely related to the work of foreign Saturdays — 11 am to 6 pm cultural centers, of which there are a few in the library.

Pangloss Pangloss isn't limited to just English and French; it also sells books in Por- tuguese, Swedish, and other languages. You can also subscribe to foreign Bolshoi Cherkassky Pereulok, 13/14 building 4 newspapers and magazines. (495) 625-58-19 Hours: Monday to Friday, 10 am to 8 pm

Online seller StudentsBook.Net http://studentsbook.net/ StudentsBook.net has a large selection of English-language books at good pric- es. Customers can buy fairy tales for children, historical fiction, popular literature, +7 (499) 638-83-03 and more. The site partners with well known Russian and international publish- ers. The catalog is regularly updated. Delivery is available by courier or through the mail, and there are pick-up points established across the country.

October-December 2014 CAPITAL IDEAS 79 MOSCOW VOCABULARY

This section of the magazine – “Moscow Vocabulary” – was created in honor of Ronald Rea- gan, who appeared to be a fan – and collector – of Russian proverbs and sayings. We would like to guide you through the world of Russian idioms, which are just as bright and colorful.

ЯЗЫК ХОРОШО ПОДВЕШЕН – yazyk horosho podv’eshen. (One’s tongue is hung well) Explanation: Someone is a smooth talker

ЯБЛОКУ НЕГДЕ УПАСТЬ – yabloku negd’e upast’. (No room for an apple to fall) English equivalent: There’s no room to swing a cat

ШИТО БЕЛЫМИ НИТАМИ – shito b’elymi nitkami. (It’s sewn with white thread) Explanation: It’s all too obvious

ТАЩИТЬ ЗА УШИ – tashchit’ za ushy. (To pull someone by the ears) Explanation: To do everything to help someone

СТАВИТЬ НА НОГИ – stavit’ na nogi (To put someone on his feet) Explanation: To cure someone of an illness Pictures by Anastasia Saifulina Pictures

CТРИЧЬ ВСЕХ ПОД ОДНУ ГРЕБЕНКУ – strich vs’ekh pod odnu gr’eb’onku (To cut everyone’s hair with the same comb) Explanation: To judge all people the same way

САПОГИ ВСМЯТКУ – sapogi vsm’atku (Soft-boiled boots) Explanation: Nonsense, nothing САДИТЬСЯ НЕ В СВОИ САНИ – sadittsa ne v svoi sani (To get into someone else’s sleigh) Explanation: To occupy a post for which one is unsuited

ПОСАДИТЬ В ГАЛОШУ – posadit' v galoshu. (To put someone into a galosh) Explanation: To put someone into an uncomfortable situation

ТЯЖЕЛАЯ АРТИЛЛЕРИЯ – t’azholaya artil’eriya (Heavy artillery) Explanation: Something that can be used in an emergency as an effective means of achieving an end

СНИМАТЬ ПЕНКИ – snimat’ penki. (To skim) Explanation: To appropriate the best part of the results of someone else’s labour

СНИМАТЬ СТРУЖКУ – snimat’ struzhku. (To take the shavings off someone) Explanation: To criticize someone severely

РАБОТАТЬ ЗАСУЧИВ РУКАВА – rabotat’ zasuchiv rukava. (To work with one’s sleeves rolled up) Explanation: To work hard ROOTS Admiral Robert Crown: Serving Russia! He was born in 1753 in Scotland under the name of Robert. But he earned his glory in Russia, becoming Roman Vasilyevich Crown here.

obert Crown dreamed of the sea from an When another war with Sweden broke out, Crown early age, and left his parents’ home at an must have recalled the legends of the Royal Navy: the incredibly young age. Then, contrary to tactical camouflage techniques of great corsairs such their prohibition, he enlisted with a com- as Drake and Morgan. mercial vessel, and after a couple of years Rjoined military service in the British Navy. In 1778, he After Mercury would leave the port, Crown would took part in the battles of the North American war on transform the ship: dirty patches would appear on the the frigate Diana. Captain Johnstone appreciated the sails, gun ports would be covered with strips of tarred abilities of the young navigator and promoted him to canvas. Crown would replace the flag with that of a ran- first lieutenant — a senior officer of the ship. dom country or a sailing company. The beautiful war- ship would turn into a common merchant ship scurrying But, due to delays, red tape and other bureaucrat- between the Baltic ports. It would then changed course ic obstacles, Crown did not get this title, in spite of and dissolve in the early morning fog to appear some- Johnstone’s best efforts. Robert Crown then decided where near a Swedish ship in a hurry to deliver cargo to join the Russian army. to the warring Sweden. After approaching the ship, the gunners would drop the disguise and bare the barrels of On February 4, 1788, he enlisted in the Navy with the guns. The enemy ship would surrender without a fight! rank of lieutenant and received a new name, Ro- According to the laws of the time, the seized ship was man. After getting to know the new officer, the com- considered a “prize.” In other words, the capturer of an manders promoted him to lieutenant commander on enemy boat or ship received a bonus prize, depending on March 10 and appointed him captain of the ship Mer- the value of the trophy. This prize was shared between cury, purchased in England for cruising the Baltic. officers, depending on rank and differences in combat achievements. The sailors weren’t left out either. Crown handled his new appointment with great re- sponsibility. His finest hour was approaching, and he Upon receiving enough prize money, Crown set out to didn’t miss it! rearm his Mercury.

By the end of 1788, Crown seized 26 Swedish merchant Crown’s upgraded ship sailed again on April 19, 1789. The ships and military transports! It was an absolute record brigantine was well disguised. Tight black canvas cov- for cruising operations in the Baltic Sea for all fleets. ered gun ports, the cannons were shifted along the side

82 CAPITAL IDEAS October-December 2014

ROOTS

Capture of the Swedish frigate Venus by Mercury on May 21, 1789. Alexey Bogolubov, 1851.

and closed off, carelessly set sails and rigging were not budge, so Mercury consistently held the best position covered, making it look like an ordinary merchant vessel. to use their artillery by rowing. Ten days later, at the island of Bornholm, the ship came across a the 12-gun Swedish vessel Snapupp, which was After a fierce battle that lasted more than two hours, also sent to explore and for reconnaissance. Deceived by the 44-gun frigate Venus lowered its flag. 302 people the outward appearance of Mercury, the Swedish ship were taken prisoner. Crown’s losses amounted to 4 allowed it to come too close. Snapupp surrendered after killed and 6 wounded. But, upon his return, it turned a short battle. Crown learned a lot of valuable informa- out that Crown was in big trouble. Firstly, Lezhnyov tion about the state of the Swedish Navy in Karlskrona wrote a report on the circumstances of the fight, from the prisoners, but decided to see it for himself. making sure to highlight his own accomplishments. Approaching an island located near Karlskrona, Crown Secondly, people reported that Crown’s wife was on ordered to raise the Swedish flag and demanded a pi- board the ship during the campaign, which was strict- lot. Soon, the pilotage boat emerged, but the Swedes ly forbidden since the times of Peter the Great. felt that something was wrong and decided to return. Crown rushed to a cannon and broke the stern of the The situation took a bad turn and was reported boat with his first shot. Mercury’s boat managed to res- to Catherine the Great. However, she appreciated cue two Swedes from the water. They then helped to Crown’s feat for what it was, and made him Cap- clarify the information on the naval base. tain of the Second Rank, awarding him the Order of St. George of the Fourth Degree. She also awarded After completing the investigation, Crown joined the him with a lifetime pension of 1000 roubles. Crown’s team of the captain-general major Lezhnyov on May spouse, Martha Ivanvona, who bandaged the wound- 16. He was sent to the Kattegat to meet the ship Sisoy ed during combat, was awarded the order of St. Cath- the Great, which was spending the winter in Norway. erine in spite of all the nay-sayers. Shortly after, the captain of an oncoming English mer- chant vessel reported to the Russians that a Swedish The frigate Venus was renovated and was incorpo- frigate was anchored in Kristianiafjord. Lezhnyov ar- rated into the Russian fleet. Captain Roman Crown rived to the location late that night and did not dare became the commander of the ship. In 1790, he dis- to enter the fjord. Mercury chose to anchor not far tinguished himself in the Battle of Revel, for which from the frigate. he was awarded a gold sword bearing the inscription "For Bravery." In the Vyborg battle on June 22, 1790, On the morning of May 21, the sea was completely Crown, commanding a small formation of ships, sank calm. The formation of Russian ships still kept a re- 15 enemy ships of the rowing fleet and captured one spectful distance and Mercury approached the Swed- cutter, 4 galleys, a transport and a gunboat. ish frigate from the astern. The Swedes did not expect anything wrong from the ship until it overwhelmed Engaged in the pursuit of Swedish ships, Crown’s frig- them with buckshot from a close distance. However, ate Venus caught up with and captured the Swedish they quickly recovered and returned the fire from two battleship Rättvisan after a 30-minute battle with the small cannons that were located on the stern. With assitance of Izyaslav. For these feats, Roman Crown no wind, the Swedish frigate could not so much as was promoted to Captain, First Rank, granted the Or-

84 CAPITAL IDEAS October-December 2014 der of St. Vladimir of the Third Degree and was ap- from St. Petersburg sailed on the admiral ship Sisoy pointed commander of a squadron of four frigates the Great: Prince Viazemsky, Puschin and Bashutsky. and two brigantines. The Admiral was very well disposed towards officers Crown exhibited spectacular growth and had a great and passengers and always invited them to dinner. career. In securing his promotion from lieutenant to These dinners were accompanied by lively conversa- Captain of the First Rank in just two years, Crown tion and toasts, which were always made by the Ad- broke another record. From 1791 to 1795 he served in miral himself. The first toast was to “safe sailing," then the Black Sea at Nikolayevsky port; in 1794-1795, he to present and absent friends, then "to the health of served again in St. Petersburg in the Coast team; in the ladies who captured our hearts," "to the health 1795-1797, he commanded various ships. In 1798-1799, of those who love someone," and so on. Port wine he commanded the ship Mstislav in the squadron of played an important role in all of these toasts for peo- Vice-Admiral Makarov, sailed off the coast of England ple’s health. By the end of lunch, pitchers were usu- and cruised with the British fleet in the North Sea. ally empty. When lunch was particularly lively, Crown would have the pitchers re-filled. In 1799, he was promoted to rear admiral and until 1804 was at in shore teams in Kronstadt; On February 11, 1804 The famous poet Viazemsky was a charming conver- he was promoted to vice-admiral of the white flag. sationalist. Pleasant, witty, hilarious, he enlivened the wardroom. Viazemsky read many of his poems, some In 1807-1812, after Russia was forced to sign the Treaty of which were quite liberal in nature. of Tilsit and break alliances and diplomatic relations with Britain, Vice Admiral Crown was removed from Petr A. Vyazemskij wrote about this trip: "... I was ad- the fleet in Moscow along with all other Englishmen opted by the ship: old Crown loved me, and the whole who served in the Russian Army and Navy. crew friendly because it was the first time they had seen a Russian poet on the ship... All of Revel is wait- In 1812, Crown was sent from Moscow to Arkhangelsk, ing for me in the hall, where the farewell ball is in full where he took command of 8 ships and moved with swing. Music thunders. Today, I will not sleep. I will go them to Suomenlinna. In 1814-1827, Crown led evolu- to the ship directly from the ball... " tion squadrons in the Baltic Sea. Here he stirred discon- tent among the Russian admirals who, thanks to such In 1824, R. V. Crown was promoted to full admiral of a long command of Crown’s, were left without sailing the Russian fleet. In 1830, R. V. Crown accepted Rus- opportunities and experience. Also, his contemporaries sian citizenship. In 1835, he was granted the cipher of found him to be too strict and demanding. His Imperial Majesty to be worn on the epaulettes.

But here is the impression Roman Vasilyevich left He died in 1841 at age 87. After serving in Russia for 53 upon the famous poet P. A. Viazemsky in 1825: years, having taken it up as his new home and giving his whole life to it, Roman Vasilievich Crown is just- This year, Crown’s squadron sailed from Revel to Kro- ly seen as a Russian admiral, not just someone who nstadt for the Supreme inspection. Three passengers served in Russia. ■

October-December 2014 CAPITAL IDEAS 85 FACELIFE&CULTURE TO FACE Fall in Moscow: party for everybody

In Moscow, fall is the “hottest” season. The weather cools down, it is cloudy and damp outside, yellow leaves dance their last autumn waltz in the air, slowly settling in rain puddles. But cultural life flourishes in the fall. Tickets to exhibitions, theatres, cinemas and concert halls are always sold out.

86 CAPITAL IDEAS October-December 2014 roducers do their best to release new films in the fall, theatres tempt au- diences with premieres, concert halls host the Pmost famous singers and musi- cians. Even television channels, which show re-runs of old TV se- ries all summer, start featuring new interesting programs in Oc- tober and November. This is be- cause fall is a “hot” season in Mos- cow – a time when there is a real fight for readers, viewers, listeners and the public in general.

n Interesting exhibition awaits history buffs. It opened at the in the middle of August andA will run until the beginning of February. The exhibition is de- voted to the 100th anniversary of the First World War. This time period has recently captured the interest and curiosity of peo- ple across different countries. People are curious to know the real reasons behind this large- scale international conflict and, most importantly, understand the consequences of the war. Af- ter all, World War I marked the starting point of a new era in the history of mankind. The exhibi- tion focuses on telling the story of everyday life at home and at the front. The museum collec- tion features portraits of heroes, flags, weapons, military awards, maps of battles, propaganda posters, objects of military life, pictures, documents and photo- graphs. Some of the most valu- able pieces are the British Army uniform that belonged to Em- peror Nicholas II and a the uni- form that belonged to the Com- mander of the 27th Regiment of Dragoons, King of Great Britain Edward VII.

October-December 2014 CAPITAL IDEAS 87 FACELIFE&CULTURE TO FACE

n October, cultural life in ander Zbruev. Zubrev will be play- school of lovers." This history be- Moscow becomes more ac- ing the role of Godunov. The Rus- hind this piece of music is quite tive. All theaters launch a sian Tsar, known for his difficult interesting. Initially, Emperor new season. Lenkom is plan- personality, who ruled the state Joseph II ordered the opera from ning to host the most an- in a very difficult time called the Mozart's main rival - 40-year-old Iticipated premiere of the coming Time of Troubles is a topic that is Antonio Salieri. But, after work- season - a new project by Mos- as relevant today as ever. ing on the opera for some time, cow's most controversial and in- Salieri abandoned the work for teresting director Konstantin Bo- n mid-October, the new unknown reasons. The emperor gomolov called "Boris Godunov." stage of the Bolshoi Theater then handed the opera over to The performance will feature the will host an opera by Wolf- 34-year-old Mozart, who com- hottest stars in theater – actress gang Amadeus Mozart called pleted the task. The opera was Maria Mironova and actor Alex- I"All women are alike, or a completed a year before Mozart's

88 CAPITAL IDEAS October-December 2014 mysterious death, the reasons for which are still debated. According to the most popular theory, Salieri poisoned Mozart. The opera may well have been one of the reasons the two composers could never get along.

n October 28, the Moscow Interna- tional House of Mu- sic is hosting a Jazz Festival under the patronageO of the famous Anatoli Kroll. "Classic jazz is timeless" is the motto of the first day of the festival. The festival will bring together the biggest Russian and international jazz stars. The program includes famous com- positions by jazz legends such as Duke Ellington, Gershwin, John, Frank Sinatra, Ella Fitzgerald and others. "I'm very happy to perform for the Moscow public," says 50-year-old pianist Leonid Ptashka, who has lived in Israel for many years (since 1990 he left the USSR) but invariably comes back home for many of his per- formances. This fun and witty performer with a fiery tempera- ment is often referred to as the "Paganini of Israeli jazz." Accord- ing to the American Biographical Institute, Leonid is one of the 100 best jazz artists in the world.

he fall tour schedule also looks exciting. November 17 will be a big day for all Sarah Brightman fans in Moscow. The legendary TBritish singer will perform at Cro- cus City Hall. "Concert for an en- core with a symphony orchestra" will be a magical immersion in the world of music, featuring Sarah Brightman's enchanting soprano voice. A few days after, the same venue will be hosting a perform- ance by the 90s cult band Roxette. Hits from Swedish band were a staple at just about every club for a long time and were always at the top of music charts. Their songs have been featured in films such as "Pretty Woman" and "Runaway Bride." In 1992, the band was rec- ognized as the best pop group in Sweden.

October-December 2014 CAPITAL IDEAS 89 FACELIFE&CULTURE TO FACE

n November 18, the Kremlin Palace of Con- gresses will be host- ing a concert featuring the young singer Gela Guralia,O one of the most interest- ing members of the popular televi- sion show "The Voice" (Golos). Gela is famous for his unusual voice and unique style of performance. His mentor, pop singer Dima Bilan who won Eurovision several years ago, once said to the singer, "Gela, you are out of this world." Dima Bilan will also be performing a few days after Guralia, but at a more modest ven- ue Crocus City Hall. To some extent, the student is already outperform- ing the teacher. The same venue will be hosting another performer from The Voice in November – singer Al- exander Gradsky. On November 3, Gradsky will be 65 years old and the certs by the Kuban Cossack Choir. n December 8, the rela- concert is his birthday celebration. It may be hard to believe, but the tively new but already musical group was founded in 1811. world-famous group he Kremlin Palace of Con- That is, the choir is over 200 years Buranovskiye Babushki gresses is hosting a lot of old! Many of the choir's hits, such as will be performing at the events this season. In late "Unharness the Horses, Guys" and OKremlin Palace. Buranovskiye Ba- November, the Kremlin "Black Crow," are known all over the bushki represented Russia at Euro- T Palace will host two con- world. vision in Baku in 2012 with the song

90 CAPITAL IDEAS October-December 2014 "Party for everybody" and won sec- ond place. The folklore ensemble was founded in the Udmurt village of Buranovo 40 years ago, but only re- cently became famous in 2010. The average age of the ensemble's par- ticipants is 70 years. The songs per- formed by these charming old ladies are based on old Udmurt classics.

nother notable concert featuring opera prima Elena Obraztsova at the Kremlin Palace on Decem- ber 11 can also be consid- eredA a mega-event. This concert is dedicated to the 75th anniversary of one of the most famous singers in Russia. Obraztsova has been leading soloist of the Bolshoi Theatre since 1964. Every single major government concert of the Brezhnev era featured Obraztsova. Her portfolio includes complex opera roles, lyrical novels and even cantatas. Every big name in Russian culture, from pop star Alla Pugacheva to satirist Mikhail Zhvan- etskiy, will show up to congratulate the famous singer.

rue connoisseurs of piano music will appreciate the concert featuring the won- derful pianist Denis Mat- suev, which will take place Tin Barvikha concert hall on December 13. Denis Matsuev is one of the most successful and well-known Russian pianists, and his performances sched- ule is completely filled for the next five years. Matsuev's concert in his homeland is a rarity.

t the end of December, multiple venues in Mos- cow will be hosting a series of New Year's perform- ances for children, which Aare called Elki (Christmas Trees) in Russia. The holiday shows will take place nearly every cultural location, from the Central House of Artists to the Cathedral of Christ the Savior. In addition to traditional dances around the Christmas tree, fun contests with Grandfather Frost and Snow Maiden always leave kids with chocolate can- dy, toffee, lollipops and caramels.

October-December 2014 CAPITAL IDEAS 91 FACEFOOD&DRINK TO FACE In Russia, people really love

Christiana Lorenzinicelebration! was never planning to live and work in Russia, but a Russian oligarch made him an offer he could not refuse. Many years have passed, there were difficulties and obstacles, and Lorenzini has changed jobs. But recently, He opened his own signature restaurant Christian and now advises everyone to come to Moscow with an open heart and mind.

How did your path as a chef begin and how did you end up in Russia?

My career as a chef started in my father’s restau- rant. Every day after school I helped him in our small family restaurant in Tuscany, between Siena and Montalcino. My father taught me a lot of secrets of traditional Tuscan cuisine, from dressing to a simple salad and making homemade pasta to cooking real Florentine steak. When I gained some experience, I went to train in other local Italian restaurants. The owner of the restaurant in Siena, where I worked as a cook, had several other restaurants in different countries, including England. I begged him to send me there. I worked in the English town of Swindon for nearly two years under the direction of a chief from Sicily, who taught me a lot.

One day, in the summer of 2004, a Russian oligarch came to dine to our restaurant. He loved the food. He summoned me from the kitchen and invited me to work in Moscow. I refused at first, since I didn’t intend to go to Russia. But two weeks later his as- sistant called me and made an offer I could not re- fuse — the salary was three times higher than I had

92 CAPITAL IDEAS October-December 2014 Andrei Sharonov In Russia, people Moscow never really love sleeps

Andrei Sharonov, Yes, it is a challenge as well. But it is a real opportunity and what is important – it is a reality. a celebration! Deputy Moscow Mayor for Economic Policy, shared with CAPITAL IDEAS his Isn’t it a challenge?

vision of Moscow as an international Yes, it is a challenge as well. But it is a real opportunity and what is important – it is a reality. financial center

October-December 2014 CAPITAL IDEAS 93 FACEFOOD&DRINK TO FACE

at the time, and there were a lot of additional ben- in Zhukovka. Thanks to him, I met the owner of the efits (apartment, car with driver, etc.). This rich man restaurant Mario, made him an interesting menu and owned several casinos in Moscow and invited me to worked for three years as a chef in his restaurant in open a restaurant in one of their establishments. A Klimashkina Street. month later, I came to Moscow, developed a menu and opened a restaurant. I worked for a year at this And how did the restaurant Christian come to be? restaurant, but it was very hard because the guests were only interested in the game and by and large After Mario, I had a lot of job options. But I chose did not care what they were eating. After that, I the Ginza Project, who really wanted to do a project worked as this oligarch’s personal chef at his home with me. We began in 2011 with the restaurant BUO- NO, and last year they have fulfilled their obligations under the contract and I started my own signature restaurant — Christian. This is a traditional Italian restaurant, but it's slightly adapted to the Russian public. It is designed in the Italian style, but is more spacious.

Is there a difference in taste between Russian cus- tomers and Europeans?

Yes, of course there is a difference. Russians love it if the pasta has more fluid and gravy. If I make pas- ta Bolognese in Italy, there is a lot of pasta, minced meat and very little tomato. The pasta turns out quite dry. And if I give this pasta to Russian guests, they will not understand and send the dish back to the kitchen. Russian guests want sauce with almost any dish. In addition, Russians love thick cream. We also use it in Italy, but local chefs believe that if you cannot make a meal without the use of cream as a connecting element, you cannot cook. But in Russia, everyone likes heavy cream, probably because you have such severe weather and very cold winters. So I try to convey the classic taste of Italian dishes, but

94 CAPITAL IDEAS October-December 2014 keep to a structure and texture that makes sense to only benefit the matter, as Russian producers have our guests. every opportunity to develop production and in- crease the quality of their products. I would say that What other differences are there? over the past few years, the quality of Russian prod- ucts — poultry, meat, vegetables, and dairy products You know, in the very beginning the company's man- — has improved significantly. agement asked me not to use ingredients that are associated with the Soviet past — barley, pork, and What do you like about Russia and Moscow that so on. I remember when I cooked a wonderful Italian does not exist in other countries? soup with barley, potatoes and spices. I served it to the founder, but he said: "Barley soup? No way! This will remind the guests of the hungry times during the Soviet Union!” This attitude is changing now, and I have included pearl barley with seafood in the menu. I plan to make several dishes with pork in the future. It’s a lovely product that can be used to cook a lot of delicious dishes. By the way, I want to explore the old recipes of Russian cuisine, which should be hugely interesting.

How do you feel about the "new" molecular cui- sine?

You know, it's more of gastronomic attraction: very bright and interesting, but has weak relevance to the kitchen. I have great respect for chefs who are do- ing it, but I think that if they develop and promote authentic Russian cuisine, it would be much better. England, for example, does not have its own cuisine, although Gordon Ramsay and Jamie Oliver are trying to create one.

I believe that real Russian cuisine has huge poten- tial that should be used. The current situation should

October-December 2014 CAPITAL IDEAS 95 FACEFOOD&DRINK TO FACE

I like that in Moscow life goes on past 11 pm and ment. You see how ordinary people live and work, until 8 in the morning, shops and restaurants are and get an interesting experience. open. In Italy, the bustle dies down after 11 pm and you can’t find anywhere to eat, even if you are very How is working in a Moscow kitchen different hungry. Your metropolis perfectly suits me and I'm from working in Italy? not sure that I will be comfortable in my small Ital- ian city again. I love to not just go on vacation, but A chef should be in the kitchen working constantly to actually live in places for 2-3 weeks, as a simple and more than anyone, because it all rests on him. man. I do not stay in a hotel, but at a friend's apart- In Moscow, the chief often acts more as a manager: he is in control, but does little cooking. And if it was an Italian restaurant, 5 people would work the kitch- en for 5-6 days a week, and they would be running around 12 hours a day from morning till night, almost without stopping, and all the while doing something — prep, cooking, frying and so on. Here, I have 30 people working in two shifts. There is a break for coffee, you can sit, relax. It is not as hard to work as it is in my country. An interesting observation is that celebrations and holidays are very important for Russians. I like that, because we don’t have the same approach in Italy. Here, any event turns into a true celebration, be it a birthday, engagement, wedding, buying a car, some anniversary, and so on.

What advice would you give to the expats who are just planning to come to Russia and work here?

First of all, I want to advise them to forget anything they were told about Russia. Come here with an open heart and mind. And you'll see the beautiful nature and wonderful people. Conducting business here is not always easy, but in Italy the bureaucracy is much more developed. So, come! ■

96 CAPITAL IDEAS October-December 2014

4 CAPITAL IDEAS October-December 2014